It was a big year for the New York City real estate market. Home prices rose across all five boroughs in 2014, albeit to varying degrees. Meanwhile, Manhattan apartment prices skyrocketed to break a previous record set during the housing bubble.
Here’s a look at the past year’s real estate trends for New York City, along with a few predictions for the 2015 calendar year.
Looking Back: Rising Home Prices in New York City
There were fewer home sales over the last few months, due to a decline in listing inventory across the New York City real estate market. The inventory crunch has pushed prices ever higher, especially in high-demand markets such as Manhattan.
According to the real estate information service Trulia, the median sales price for homes in New York City rose above $1.2 million, for the two-month period ending in December 2014. Compared to the same period in 2013, that marked an increase of 20% in the median sales price for NYC. Home sales, on the other hand, dropped by a whopping 60% over the same 12-month period — a result of inventory contraction.
In Manhattan, the average sales price rose to a record high of $1,718,530 in 2014, according to Jonathan J. Miller, president of the Miller Samuel appraisal firm. That’s even higher than the average prices seen during the housing bubble, and it’s largely due to a dearth of inventory. There are plenty of buyers, but not enough properties to go around.
Of course, Manhattan marches to the beat of its own drum, where real estate is concerned. What about the rest of New York City? Here’s how the median home price changed in the other four boroughs, over the last 12 months or so: *
- Brooklyn: Home prices rose by around 13% over the last year or so. They are expected to rise by around 5% in 2015.
- Queens: The median price in Queens rose by 8% in 2014, with a one-year forecast of +2.8% over the next year or so.
- Staten Island: Prices climbed by 4.2% last year, with a more moderate prediction of 1.1% in 2015.
- The Bronx: Home values in the Bronx rose more modestly in 2014, climbing by only 1.5%. This market could remain mostly flat this year, where house values are concerned.
* These figures are based on Zillow’s proprietary Home Value Index and “Zestimate” formula.
Looking Ahead: Real Estate Predictions for 2015
At the moment, demand for housing far exceeds supply across most of the New York City real estate market. This will likely continue in 2015, at least for the foreseeable future. Manhattan is an extreme example of this imbalance. But the trend is being played out to some extent in the other four boroughs, as well as surrounding cities in the broader metro area.
Experts are predicting a more moderate level of price appreciation, compared to last year. The real estate listing website Zillow recently made a prediction for the New York City real estate market. The company’s economists expect the median home price to rise by 3.4% in 2015, compared to 9.1% in 2014. This cooling trend is expected to occur, to some extent, across most of the U.S. in 2015.
Alan Lightfeldt, a data scientist with the NYC real estate listing website StreetEasy, expects the red-hot Manhattan real estate market to cool considerably in 2015. “We predict condo prices will increase at just half their 2014 pace over the next year . But this is a welcome sign of a much more healthy and sustainable growth rate,” Lightfeldt said.
StreetEasy also predicts that Brooklyn and Queens could experience the most inventory growth in 2015, compared to the other New York City boroughs. With a higher number of properties for sale, the Brooklyn and Queens housing markets could lure “more buyers away from the limited supply in Manhattan,” the company said.
Forecast: NYC Mortgage Rates Below 4% to Continue
What can we expect from New York City mortgage rates in 2015? More of the same, probably. Earlier today, Freddie Mac reported that the average rate for a 30-year mortgage dropped to 3.73% for the week. This time last year, the 30-year average was at 4.51%.
The Federal Reserve has held the federal funds rate (that banks use when borrowing money from each other) near zero for many months now. This, among other factors, kept 30-year mortgage rates hovering in the 4% range for most of 204. This trend will likely continue for the first part of 2015.
Yesterday, the Federal Open Market Committee (the Federal Reserve’s think tank) said they are unlikely to raise rates for at least two more months. According to the minutes from their December 17 meeting, which were released yesterday, fed officials stated they “can be patient in beginning to normalize the stance of monetary policy.”
As a result of these and other factors, we expect NYC mortgage rates to hover between 4.75% and 5% for the next few months, and possibly beyond that.
Disclaimers: This story contains forward-looking statements (forecasts and predictions) regarding the New York City real estate market in 2015. Such statements are the sole opinions of the authors and should not be viewed as facts. We make no claims or assertions about future conditions in this or any other housing market.