Even though it’s early in the game, 2014 has already distinguished itself from recent years. Looking over yearly real estate market forecasts since 2007, which range from anticipatory and nervous to downright anxiety-ridden, there is now a palpable sense of peace, stabilization and equilibrium unseen for a good stretch of time. With the first minutes of 2014 ticking, here are my thoughts on what to expect in the months to come.
It cannot be said enough that New York is unique in so many ways, more so now because we are welcoming not only a new mayor locally but a new chairman of the Federal Reserve nationally. With mortgage rates foremost on everyone’s mind, Janet Yellin’s appointment to the Fed in October allayed concerns that the bond-buying program which helped fuel recovery and keep rates at historical lows would reflect, if not status quo, only a modest adjustment in the future landscape of home purchasing and refinancing. Those who predict rates reaching as high as 6 percent by the close of the new year are countered by a more conservative understanding (in the wake of several false alarms throughout 2013) that small increases are to be expected, which will do little to affect buyer behavior. An upward trend in rates is a clear reality, but it should only serve to inspire more buyers to take advantage of present market affordability. True, new underwriting standards will make loan qualification more difficult for some, though economists generally agree this is necessary medicine to avoid repeating mistakes.
From the average buyer to the ultra-luxury market, the buzz around developments like One57, 432 Park Avenue, 18 Gramercy Park and others ranges from cautiously optimistic to frenzy-inducing. The record land prices set in 2013, coupled with the influx of foreign money and aided by China’s easement of sanctions against overseas investment, all serve to stoke the boom in this corridor of the marketplace. As One57 cites 70% of its apartments selling for $11,000 per square foot, Tribeca’s 56 Leonard Street and Rudin’s Greenwich Lane (formerly St. Vincent’s Hospital) are poised to achieve records in their own right. While developers are showing some concern for Mayor Elect de Blasio’s plans to revisit midtown east rezoning laws and Bloomberg’s 80/20 tax-exemption incentive for affordable housing, ground has now broken at a $200 million dollar development at Pier 17 in the South Street Seaport, there is a $180 million dollar price tag on the city’s six acre Seward Park site on the Lower East Side, and a $3 billion dollar stake just sold to Greenland Holdings for 70% ownership in Brooklyn’s Atlantic Yards project.
Speaking of Brooklyn, no other marketplace encapsulates the climate of 2014 quite like the city’s largest borough. The soaring rental prices of Manhattan (now at an average of $3,418) reached their closest level of parity to Brooklyn in 2013, and the fierce bidding wars and inventory shortage seen throughout the city have reached even the most remote corners of Gravesend, Bensonhurst and Bedford-Stuyvesant. Here, there and everywhere, the momentum will continue, and don’t be surprised if you start hearing more about interest in the long-dormant Bronx and Staten Island. Although Manhattan inventory will improve somewhat in 2014, the appeal of these long-ignored neighborhoods will assuredly grow as the choices for urban living remain few and far between.
Some industry experts are quick to side-step or shun market predictions altogether by saying there is “no crystal ball” for determining what will happen in the course of a year. That said, it is fairly safe to say the framework for 2014 has already been set been set by 2013, and the promise it holds is inspiring.