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Sales and rental markets 2013 predictions

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Sideways with a touch of UP.

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Prediction: sales prices up for the year, although with one stagnant/bad quarter in there somewhere. Rents up 6% or so.

ali r.
DG Neary Realty

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"How about more insight? What supports 6% rent up?"

Basically sounds like it was pulled directly out of a lower bodily orifice. Does the fiscal cliff ring a bell for anyone? Dividends are taxed as ordinary income and capital gains taxes increase by 33%. And then there are the increases on marginal income taxes across the board. Less take home income = less buying power. But, yet, some borker decides the real estate market is only going up and up. Don't let the facts get in the way of your delusions.

The Fiscal Slope will be "old news" in 2 weeks. The Repubs just can't be seen to vote for tax increases before 12/31. After 12/31, they can vote for "tax decreases" from the new increased levels. AMT gets fixed. 10% tax rate gets fixed. Unemployment gets fixed etc... Mortgage interest remains deductible. No way are they going to hit housing before it's fully recovered. Same outcome but they can still say that they never voted for a tax increase come their next election. The economy will suffer during 2013 due to this shameless politicking and uncertainty but what's more important, solving things before they're broken or their next election??!!

Taxes for those above $500k do increase. Effect on property - minimal.

Anyway to the matter in hand. Here's my 0.02c for 2013 Manhattan.

Rental market is softish, likely slightly down based on prices getting ahead of demand during 2012.

I think sales market is moderately up perhaps 5%. Right now, inventory is very tight and there's little prospect for that supply side to change significantly in 2013. Economics suggests that if demand exceeds supply then prices will increase. I'm seeing a number of individuals. myself included, running the numbers on 3% mortgages and coming up with the conlusion that 5, 7, 10 year carrying costs on a purchase are lower than renting unless the rental market falls considerably or sales prices drop considerably.

I'm not going to get into a debate on what happens in five years time when/if interest rates are higher and when/if more inventory gets put on to the market and when those who'd are underwater after closing costs can finally sell. I'm simply making a statement on 2013.

My crystal ball doesn't go as far as 2014 and I'm not suggesting that it can't be down.

Here's where I'll go out on a limb. If momentum really gets going and it becomes irrefutable that prices are increasing in Q1/Q2, I think we could actually see a mini-boom in 2013 as momentum feeds the demand side. In this scenario, I'll say 12% up in 2013. We all know real-estate is cyclical and sentiment based and that's what makes it so difficult to predict.

SE condo index up 4% . Not sure which rental index is reliable but up 5% for properties under $6-7k per month. I am bullish on the economy once fiscal cliff is sorted out, which may take 2 more months.

The talking heads of the real estate industrial complex are saying "flat" on the rental market. Given that they never say "down", not a sign of confidence in the market:

Agree if Gary Malin says flat, it is hard to see the rents being up.

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Interest rates up at least .75% over the next 9 months.

Sales within $1000 to $1100 per sq ft avg of combined coops and condos for the year.

Rent may go up, as there will be a lot less buying. Question is how much brooklyn, queens, and northern manhattan absorb this traffic. I think those areas go up regardless.

Condos are in a mini bubble right now, averaging $1300 per sq ft while coops @ $930.
Avg maintanance for condos seriously spike because of taxes and now surpass co-ops.
Either condos have to come down a bit or co-ops will go up. I think a little bit of both will happen.

The real estate market continues to grow as demand remains and supply has still not caught up due to the freeze during the recession.

Rent is going gangbusters in LIC!

2 bedroom going for 4,000 bucks a month.

With unemployment at 7.7% and QE infinity still going, i say everything continues to float UP.

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I think rents and sales continue to grind up. Only way that changes is we have another lehman like blow up.

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Demand. The developer sets initial offering prices based on what she thinks the market will support. Asking prices will then go up or down depending on how the project flies, the popularity of particular lines and floors, etc.


1. likely rising food inflation will crimp rents paid by lower income tenants
2. unless professional incomes take a big hit, the high end rental market will hold up
and go up because there aren't enough desirable rentals for wealthier people in the
$2000-$4000 price range: and maybe higher and lower than that range as well

3. equity prices eventually follow rental property "dividend" yields: rent less operating cost
4. higher interest rates will crimp yields and act as a brake on equity prices
5. inflation will have the opposite effect, as will FED RES. increasing monetary liquidity
6. the most vulnerable sector of the NYC resential RE market are occupied coops and condos
7. different scenarios could cause their prices to collapse, as they did 22-17 years ago
8. 2-3 family homes, especially in highly inflated markets like Astoria, could also do poorly

9. there is also the real world effect of ObamaCare, which is leading many employers to reduce
employee hours from full-time to part-time: that behavior will damage the low and middle
income sectors of the rental markets, and have Keynesian subtractor effects on the businesses
which those downsized workers patronize, such as restaurants, hair stylists

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1. you are correct about higher payroll taxes
2. but their impact will be strongest on lower and middle income housing
3. for example, East Harlem, Forest Hills, even Astoria
4. most of the Manhattan market wont be much affected, especially the upper 1/2 of it

3 months in to the year, do we have more predictions on prices for 2013? I went 5% to 12% up and thought I was really going to the high end on the 12%. I guess I should clarify that I am talking change in average price per sqft which seems like the fairest measure vs overall average or median. Feels like the 12% predication could materialize unless something significant comes up to take the wind out of the sails.


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