New York City single-family home values forecast to drop, led by Manhattan
THE Federal Reserve’s aggressive interest rate hikes are catching up with some homeowners in New York City.
The market value of single-family properties is projected to fall by about 3.4 per cent citywide to US$738.8 billion in the upcoming fiscal year beginning Jul 1, according to a tentative assessment roll released by the Department of Finance on Tuesday (Jan 16). Manhattan homes are forecast to slump the most, by 5 per cent, while Brooklyn home values are projected to fall 3.3 per cent.
Overall, the growth in value of New York City’s 1.1 million properties is expected to slow as the decline in value of single-family home prices is offset by rental buildings and trophy office towers. The projected rise of 0.7 per cent for the next fiscal year would trail last year’s 6.3 per cent jump.
The US housing market has sagged as the Fed began hiking its benchmark interest rate in 2022 to quash inflation. Mortgage rates rose in tandem and homebuyers pulled back. Sellers, meanwhile were reluctant to move and take on higher mortgage costs.
“The decrease in single-family home values is consistent with national trends, while rental building values were buoyed by continued growth in market-rate rents,” Department of Finance Commissioner Preston Niblack said. “One positive indicator was a resurgence in construction and renovation spending after three years of decline.”
Homeowners in the boroughs should expect to pay higher taxes, in aggregate, as assessed values rose by 4.7 per cent. Assessed values can rise – even if market values fall – because assessed values are catching up to previous market value increases. State law caps growth in assessed values to 6 per cent from the year before or 20 per cent over five years.
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The city set a market value of about US$1.5 trillion for residential and commercial properties and utilities. Citywide assessed values, which determine the value of property for tax purposes, are projected to rise 4.2 per cent to about US$299 billion.
Property taxes are the biggest source of New York City’s revenue, providing about 30 per cent of that for its current US$110.5 billion budget. Commercial rent, mortgage recording and sales transfer taxes add another 3 per cent.
Property values for fiscal year 2025 reflect real estate activity from Jan 6, 2023 to Jan 5, 2024, as well as income and expense information on commercial properties during calendar year 2022.
Property owners can see their tentative assessment via the Property Information Portal.
Meanwhile, the value for co-ops, condos and rental apartment buildings rose 5.3 per cent to US$370.4 billion. Brooklyn has the largest increase, 9.2 per cent, and the largest billable assessed value increase.
New York’s office market remains weak as remote work and rising interest rates depress values. Office market values rose 3.5 per cent, led by trophy buildings such as One Vanderbilt, valued at US$1.1 billion. The value of Hudson Yards – a new neighbourhood of offices, retail and residential buildings on Manhattan’s far west side – rose to US$6 billion, an 8.7 per cent increase.
The total market value of commercial properties rose 4.4 per cent to US$329.6 billion and assessed values increased 3.5 per cent to US$133.5 billion. BLOOMBERG
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