For the longest time, New York City took the top spot for being the most desirable location in the United States to invest in real estate. In fact, the city was only second to Tokyo for being the largest market globally. Both locally and foreign investors would flock to New York City because of the prices and the land appreciation on an upward trend.
But in recent months, this trend has slowed down significantly. Both foreign and domestic investors have taken a second look before taking the investment plunge in residential, commercial and industrial properties in New York City.
So what is the cause of the decline and is it something to be concerned about? The answer, probably not.
Every Market Fluctuates
New York City is not alone in the fluctuating real estate market. It happens everywhere. There will come a time after a significant increase in the market, when prices are high which make it perfect for sellers, that an adjustment period will come. The market is correcting itself and getting back on track.
There are many factors that contribute to the real estate market. Government policies and subsidies can significantly impact property demand and prices. Legislation like tax credits can give the market a boost in demand. Consider back in 2009 when the government introduced the fire-time homebuyer’s tax credit which gave the market the boost it needed for the broken economy.
The economy itself is another factor that contributes to the fluctuation. If the economy is healthy, citizens are more likely to be in the buying mood. Compare that to a sluggish economy with less money; chances are the real estate market will feel that pain.
Lack of Supply
Lots of times, the cause for a decline in the market is simply not having enough supply. There are not enough properties hitting the market to keep the boost going. The other side of that is the properties that are going on the market are overpriced for what they are truly worth.
But that is not necessarily the case anymore. A quick search for New York City commercial real estate will show you how that is changing. Some properties are popping up again, and with the market correction recently occurring, the prices might be more in the line with what you would expect.
No Need to Worry
When the market trend is lower than what some would hope, it allows investors and sales agents to be a little bit creative to engage the slower market. How the boost opportunities in a slow market can influence the change needed.
Is that what is happening now in New York City? Or is government regulation with the new federal tax plan impacting potential buyers and investors? The answer could be yes to both. The recent Tax Cut and Jobs Act in December could have been the boost to get the ball rolling. Many believe that it won’t be long until the New York City real estate market is back up for business as it was before.