Mahattan Real Estate: Stabilizing Rents and Buyers’ Neighborhoods

In the Manhattan real estate scene, some neighborhoods are having far more success than others in selling this season. If you are contemplating buying, that can mean deals. What’s more, rental prices around Manhattan changed very little from October to November, which means the rental market is stabilizing, even if momentarily.

Photo Credit: edenpictures

Some neighborhoods are having a hard time attracting buyers

What Stabilizing Rents Mean

If rents are stabilizing, it means two things:
1) That good deal on the rental will still look like a good deal in a few months.
and
2) High occupancy in rentals is a leading indicator that home prices will rise. Usually rentals and sales work inverse of each other. If there are vacancies rental prices go down and it makes more sense to rent rather than buy. If occupancy goes up and rental prices go up, people stop renting and make the investment of home ownership.

In this fluctuating market, knowing that rents are steadying is valuable- and taking their level into account can help you make a good play for you and your family.

Good Manhattan Neighborhoods for Buyers

Matthew Haines, founder of PropertyShark, prepared some great numbers about Manhattan neighborhoods recently- Haines and his team dug into third-quarter numbers to help pinpoint the five areas of prime Manhattan that have been toughest on sellers. They evaluated Manhattan neighborhoods on three major criteria:

1. How long it takes a typical seller to find a buyer there (Manhattan average: 150 days)

2. What is the median-price drop over the past two years (Manhattan overall: 10%),

3. What is the number of closed sales relative to the total number of properties on the market (23%)

Then they went on to evaluate the five neighborhoods where sellers may be most ready to make a deal. Here they are:

1. Chelsea/Flatiron/ Union Square/ Hudson Yards
2. Midtown/Midtown South
3. Soho/Tribeca/Little Italy
4. Upper East Side/Carnegie Hill
5. Battery Park City/Financial District/South Street Seaport

In each of these neighborhoods, properties spend well over 140 days on market, several have seen a 10%+ price drop from 2007 rates, and less than a quarter of the properties on the market in each neighborhood have been closed. (For more details, look at the NY Mag article).

With that said those hot downtown neighborhoods are hurting but primarily in the luxury market. I don’t want you getting too excited and thinking you will get the 2000 sq foot Soho loft you dreamed about for 500K. Most of the pain has to do with properties in the luxury market.

If you are looking to buy in any of these neighborhoods, now is a good time. Bottom line: When the market is weak, prices become more flexible. In those neighborhoods the numbers don’t lie.

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