NYC property values are seen rising 6.1%, boosted by single-family homes

THE value of New York City’s 1.1 million properties is projected to rise 6.1 per cent for the next fiscal year, boosted by single-family home prices.

The city set a market value of about US$1.48 trillion for residential and commercial properties and utilities for the fiscal year beginning in July, according to a tentative assessment roll released by the Department of Finance on Tuesday (Jan 17). Citywide assessed values, which determine the value of property for tax purposes, are projected to rise 4.4 per cent to US$286.8 billion.

Property values for fiscal year 2024 reflect real estate activity from Jan 6, 2022, to Jan 5, 2023.

“The decline in office occupancy continues to impact retail stores and hotels in the city contributing to the sector’s slow recovery,” Department of Finance Commissioner Preston Niblack said in a news release. “At the same time, single family homes, which constitute a majority of residential properties, have exhibited a robust recovery and continued growth,” he said.

Real estate taxes are the biggest contributor to New York City’s coffers, providing about one-third of the revenue for its US$106.4 billion budget. Property taxes are also the primary source of funds backing the city’s approximately US$40 billion of general obligation bonds.

Sales slowed

The market value of single-family properties rose 8.3 per cent citywide to US$765 billion, with homes in Staten Island having the biggest increase at 12.1 per cent, according to the finance department. Meanwhile values for co-ops, condos and a rental apartment buildings rose about 1 per cent to US$351 billion.

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To be sure, the residential market in the second half of 2022 slowed as a result of the Federal Reserve’s aggressive campaign to raise interest rates and amid declining Wall Street profits.

Home sales in the city have slowed for five straight quarters on an annual basis and slumped to 17 per cent below year-ago levels in the third quarter and are projected to fall about 5 per cent in 2022 and 2023, according to the finance department. Still, transactions are projected to remain above the pre-pandemic average of about 51,000 sales per year.

Office market

Meanwhile, New York City’s office market continues to struggle as workers have been slow to return and uncertainty remains about the long-term impact of remote work.

The total market value of commercial properties rose by 7.4 per cent to US$317.2 billion and assessed values rose by 5.2 per cent to US$129.7 billion. Market values of offices rose 7.1 per cent, while retail buildings and hotels registered a market value increase of 5.4 per cent and 9.7 per cent, respectively. The market value for commercial property is still below pre-pandemic levels.

The combination of weak leasing activity and a surplus of new inventory, particularly in Midtown, pushed the vacancy rate to 22 per cent in November.

City officials expect vacancy rates to rise further in 2023 while asking rents are projected to decline to their lowest level in nearly a decade, according to a financial plan released last week as part of Mayor Eric Adams’s preliminary budget. BLOOMBERG