Is NYC Housing Becoming More Affordable?
About a week ago I stumbled across this article with a highly misleading title- NYC Housing Becoming More Affordable Amid Growing Vacancies And Flood Of New Inventory. If you live in NYC you’re eyes would most likely pop out of your head like mine did. However upon reading, I realized there were solid statistics to back up these claims. British Prime Minister Benjamin Disraeli famously said, “There are lies, damned lies, and statistics”.
Below I will raise some of the points and counterpoints illuminated in the article along with highlighting some key takeaways:
1. Manhattan apartment sales are at 6-year lows, which translates to a 20.1% drop in coop and condo sales.
This one is simple really-appreciation is accelerating so people stop putting their homes on the market. Less homes available=less homes sold. With this statistic being the first sentence of the article, how does the title make sense?
2. Household income among NY renters rose 11% over 3 years while rents rose just 8.2%.
On the surface this statistic seems like rent is getting more affordable, however later in the article NYC housing commissioner Maria Torres-Springer postulated whether the current tenants were making more money or whether there were higher income occupants moving into the newly inflated rental units. I tend to think the latter. She is quoted later as saying, “the city is still facing a dire affordability crisis”.
3. The vacancy rate in Manhattan is 4.73%, the highest it’s been in a decade.
This number is skewed since the luxury rental market ($2,500 or more) has vacancy rates of 8.74%, the highest rates in years.
I’ve said it in previous blog posts and I’ll say it again, there is a glut of inventory in the luxury markets while traditional, affordable markets are having the converse effect. Moving forward, there should be a reversion to the mean.
One of my favorite comedians Bill Burr has a bit where he bashes misuse of statistics. While making fun of his friend not wanting to swim in the ocean, he says in a mocking tone, “did you know most shark attacks happen in shallow water?” then replies, “of course, that’s where all the people are”. The point is, just because you hear an argument backed up by solid statistics, it’s how you apply the statistics that affirm or discredit the argument. 90% of shark attacks happen in shallow water because that’s where almost 100% of people are swimming, and Manhattan living is becoming more affordable to wealthy individuals in luxury markets while the people who struggle to find an affordable home are now struggling more than ever. So, beware the damned lies!
Upon reading this post you may feel defeated or discouraged if you’re not in the ultra-luxury market, however fear not. Current trends are easily seen from a distance and act with a lag. Sure prices are going up in the traditional markets, but that means there’s an opportunity. If you are thinking about purchasing a home, do it sooner rather than later. Start building equity instead of allowing rent to bleed you dry. You wont regret it!