New York City apartment values expected to jump 7.3%
RESIDENTIAL real estate is poised to lead a comeback in New York City property values amid a housing shortage and still-high interest rates capping sales.
The market value of the city’s more than one million properties is projected to rise 5.7 per cent to US$1.6 trillion, in the upcoming fiscal year that begins on Jul 1, according to a tentative assessment roll released by the Department of Finance (DOF) on Wednesday (Jan 15). Last year, values rose just 0.7 per cent, reflecting the Federal Reserve’s aggressive rate hikes.
The picture is even better for co-ops, condos and rental apartment buildings, where market values are projected to rise 7.3 per cent. Rents surged after the Covid-19 pandemic, driven by a dearth of inventory. The median rent for a one-bedroom apartment in New York City rose 21 per cent from February 2020 to September 2024, according to the city comptroller’s office.
Brooklyn is expected to lead with an estimated market value jump of 9.4 per cent, as rental apartment values in the borough climb 15 per cent. The data reflects real estate activity from Jan 6, 2024, to Jan 5, 2025, as well as expense information for commercial properties during calendar year 2023 and submitted to the DOF in 2024.
“The residential real estate market has grown, with an increase in single-family home sales and values, while rental property values continue to reflect growth in market-rate rents,” according to Preston Niblack, the DOF’s commissioner.
Real estate taxes are the biggest contributor to New York City’s coffers, providing almost one-third of the revenue for its US$115 billion budget. Property taxes are also the primary source of funds backing the city’s approximately US$42 billion of general obligation bonds.
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Citywide assessed value – the portion of market value that is taxed – rose by 3.9 per cent to US$311.2 billion, according to the DOF’s projections.
Single-family property values are poised to rise about 6 per cent, with homes in Staten Island showing the biggest increase.
There are even signs of recovery in the closely watched commercial real estate sector. With more workers returning to the office, the total market value of commercial properties are expected to climb 3.8 per cent to US$339.5 billion, while assessed values are projected to rise by 2.9 per cent to US$135.9 billion. Trophy office buildings are leading the bounce.
A number of Wall Street firms have moved to bring back workers five days a week in person, which has brought New York office visits to just 14 per cent below their pre-Covid levels in October, according to Placer.ai estimates.
Still, citywide office vacancy rates remain high around 23.4 per cent in November, down slightly from 24.3 per cent mid-year, according to the city comptroller.
Market values of offices rose 2.7 per cent, while retail buildings and hotels registered increases of 2.5 per cent and 5.9 per cent, respectively. BLOOMBERG
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