Spring real estate heating up, so move quickly, experts say
Looking for a new pad? Act quick or you may lose your chance.
Inventory in the real estate market is in extremely high demand this spring thanks in part to fewer available spots, rental prices increasing earlier than expected and a higher employment rate that is arming people with more money to spend, according to experts.
While buying property in the boroughs is always competitive, a lack of new property becoming available in the last few years makes the struggle for digs even more taxing this season.
"It's going to be a very competitive market because there's not a lot of new inventory coming online this year," said Gary Malin, president at Citi Habitats.
The Manhattan rental vacancy rate has ebbed slightly, at 1.41% in the first quarter according to a Citi Habitats market report, up from 1.22% a year ago.
Malin added that since the vacancy rate is low and the rental process is so expensive, many people right now are looking to buy.
The market as whole poses a challenge this spring, but here's what to expect if you're looking for an apartment:
Rental prices increased earlier this year than anticipated, Malin said.
After the new year, "Tenants needed to transact because there wasn't a lot to choose from to begin with," he said. "They knew that rents were likely to go up into the spring and summer season [and] they wanted to at least get what they projected to be a better deal."
But as rents continue to rise, Malin said prospective renters should act quickly.
According to the March Citi Habitats report, rents for Manhattan studios increased 2.4% over the last year to $1,999, and one-and two-bedroom apartments went up by 0.6% and 1.1%, to $2,714 and $3,859, respectively.
Three-bedroom rentals decreased by 2.3% on average to $4,942 a month.
"From a tenant standpoint, you need to come prepared, you need to come ready to transact," Malin said, "or you're likely going to lose what is a good opportunity for you."
The buying market is also a tense situation, experts said.
According to a report released today by real estate group MNS, new development inventory on the sales side in Manhattan dropped 53.94% between the last quarter of 2012 and the first of 2013.
Andrew Barrocas, CEO of MNS, said this drop is significant and attributed it to three causes.
The first, he said, is that there is currently a huge demand for large-sized apartments worth $2,000 per square foot and up.
As a result, developers are converting buildings that used to hold 100 units into 20 to 35-unit developments, he said.
Another reason Barrocas cited is that banks are more willing to lend out money to buyers as the economy improves.
In addition, during the economic downturn, few developments were planned as developers faced financial uncertainty. Now that the economy is doing better, more inventory is being planned out, and inventory numbers will rise in the next 12 to 24 months, Barrocas said.
"You are going to see a decrease in the amount of inventory on the market for a little bit," he explained. "You started really seeing a lot more [developers, equity traders] getting active at the end of 2011, 2012 as the market came back, consumer confidence came back, [and] banks started opening up and started lending on the condo side."
But despite the low inventory numbers, Malin said the interest in new developments is so high that people are buying apartments off the floor plans up to a year in advance, which was a rarity in recent years.
For example, according to Corcoran, 56 Leonard, a 60-story and 145-residence tower in TriBeCa designed by Swiss architects Harzog & de Meuron, moved more than $450 million in inventory and reached more than 50% sold since it opened for sale in late February.
In addition 101 W. 87th St., a 62-residence new development that opened for sale four months ago, has already reached 85% sold, according to Corcoran.
James Famularo, managing director at New York Commercial Real Estate Services, said business from a commercial standpoint is so busy he had to hire new staff to prepare for spring.
"There's no doubt in my mind that it's going to be a phenomenal spring," he said. "Before the vacancies come online, we're finding deals for them. It's amazing."
One building Famularo said is hot right now is 206 Spring St., where Chef Michael White has plans to open a new steakhouse.
"This is a good time for everyone,[but] people who want property have to move quickly," he said.
Famularo also warned that getting a loan from the bank isn't as easy as it used to be, and to be prepared with 30% to 35% of the cost ready for a down payment.
According to Justin Schuss, founder of RentalEngine.com, a site that aggregates no-fee listings from around the web, "Murray Hill, East Harlem, Midtown West [are] where you can get a bargain for your money. Walk-ups and elevator buildings there too are reasonable, while there's still close proximity to transit."
The areas below 23rd Street in Manhattan continue to be popular as well, he said.
Chelsea Park, at 260 W. 26th St., a new full-service, 204-residence luxury rental development that offers amenities such as a rooftop deck with a wet bar and outdoor showers, is doing very well so far, he said.
According to StreetEasy.com, another listing site, rentals in Chelsea Park are going for an average of $4,134 a month.
"I think this building is really going to be making a splash on the market this spring," he said.
Another building Schuss suggested looking at is 27 on 27th in Long Island City, a 27-story luxury rental building which also offers amenities such as stainless steel GE kitchen appliances, a 24-hour concierge and a library.
It is in close proximity to Manhattan, located near the Queens Plaza M, N and R train stop.
Another building Schuss recommended is the luxurious new Riverwalk Crossing on Roosevelt Island, a waterfront rental development that boasts amenities such as a swimming pool and an entertainment lounge, at 405 Main St.
Apartments for rent on StreetEasy from Riverwalk Crossing are going for an average of $3,361 a month.
Over in Brooklyn, Gowanus and Bushwick continue to gain popularity, with Bedford-Stuyvesant joining the line.
"People with higher incomes are really moving in there," Schuss said of Bed-Stuy. "It's a bull market and everyone just loves all these new areas."
Looking to Rent
The real estate market is hot this spring, as New Yorkers emerge from their hibernations, ready to relocate in the warmer weather. We spoke with some residents-on-the-move to see what their experiences are like this year.
Betty Banks, 25, a PhD student at New York University studying history, is moving from Stuyvesant Town this summer.
What areas are you looking at? I don’t have set areas, but I’d like to be in Manhattan, below 120th Street. Realistically that would be the Upper East Side or East Midtown. But I’m also looking in parts of Brooklyn near the parks, like the edge of Crown Heights or even Park Slope, but that can be expensive.
What are some of the obstacles? There’s cost. I can’t afford to live by myself. Also, I know it’s good that the market moves so quickly, but that’s a challenge too. My current lease runs out while I’m away this summer, and I can’t find a place before I leave.
How are you looking? At the moment I’m looking online, but I will probably use a broker. Right now I’m also asking all of my friends if they’ve heard of places.
How long have you been looking? I need a place in August and my lease is up in July when I’ll be away, so I’m just starting out. I’m starting early because I’ve never looked for an apartment in the city before.
Looking to Buy
Andrew Dumas, 31, works in sales at a digital media company. He is currently awaiting co-op approval on an apartment in Chelsea.
What areas are you looking at? I started looking in Brooklyn, but since a year ago I’ve been looking at places on the West Side, so Chelsea, West Village.
What are some of the obstacles? Just being patient and trying to find the right place. Once you find the apartment you like, you have to be incredibly aggressive to get it. It’s a mix of finding that ideal place and acting fast enough to get.
How are you looking? I didn’t know anything about how to buy, I didn’t know what was the value, so I used a broker from the beginning.
How long have you been looking? I’ve been looking for the past year or so. We’ve agreed on the price, I need to go in front of the co-op board and get approved by them. The bank needs to get my mortgage underwritten. I’m waiting on the final contract now.