New York, one of the world's most recognized cities, has long been a place where dreams come true. And although the cost of living in New York is indisputably high, it continues to entice people from every background and walk of life. With the best Walk Score of any city in the United States, all the excellent amenities, nightlife, dining and entertainment that big cities have to offer and a surprising amount of green space, New York isn't just a city - it's a place people are proud to call home.
The population of New York rests around eight and a half million people. This figure is anything but static, and there were years in decades long past where more people were leaving the city than moving into it. Even in periods of population decline, however, vacancy rates for New York rentals were tiny. The current vacancy rate across all five of New York's boroughs is just 3.10 percent, the second lowest vacancy rate in the country, and it will likely drop even further as New York's population continues to increase.
In the 1970s, renters accounted for well over 70 percent of New York's population. While that figure has declined over the past few decades, the proportion of renters remains well over 60 percent. The ratio of New York renters to homeowners is roughly opposite that of most other American cities.
While the New York housing market has had better decades than others, like the city itself, one thing is certain about its rental market: New York rental properties will always yield excellent returns.
Q2 2015 New York Rental Market Update
In Q2 2015, New York was the ninth-best Northeastern housing market to own rental properties in and 55th-best in the country as a whole. Since Q1 2015, New York dropped six spots in the Rental Ranking Report's regional rankings for the Northeastern U.S. and 21 spots in the national rankings.
Everyone in the world knows that New York is a highly desirable place to live and, accordingly, it has extremely expensive housing. This doesn't necessarily mean it's a great market for rental property investment, however. The average capitalization rate, a statistic that compares annual rents and property values that is commonly used by investors to gauge the attractiveness of rental properties, was a modest 6.58 percent for New York rental real estate in Q2 2015. While hardly horrible, New York's "cap rate" is smaller than the cap rates of most other major U.S. metropolitan areas, including other Empire State markets like Syracuse and Poughkeepsie that have considerably lower property values.
New York also suffered in Q2 2015 from negative rental price appreciation; New York rents declined by -0.18 percent, on average, during that period (compared to the national average rental price appreciation of 4.98 percent). This rental price decline is, of course, hardly tantalizing to any current or prospective New York rental property owners.
Regardless, New York rental real estate can still be a lucrative investment. The New York vacancy rate in Q2 2015 of 4.50 percent was quite low (33 percent less than the national average), as one would expect to be the case in the Big Apple. New York's modest annual job growth rate of 1.66 percent in Q2 2015 was respectable (albeit approximately 20 percent below the national average during that period), especially for a metropolitan area of its size. Taken together, these statistics indicate that demand for New York housing is unlikely to drop anytime soon.
Q1 2015 New York Rental Market Update
The Q1 2015 Rental Ranking Report found New York to be the third best market in the Northeastern U.S. and 34th-best in the country as a whole. By far the best part about the current state of New York's housing market is its exceedingly low vacancy rate of 3.10 percent, which was second best in the country last quarter and 130 percent lower than the national average. Another was its projected shortage of housing inventory over the coming year of almost 75,000 units, a shortage so great we ranked New York third on our Future Rental Availability Index.
Comparatively speaking, New York lags in a number of other metrics. It experienced modest year-over-year property value appreciation of just 3.46 percent, several percentage points lower than the national average (although nothing to snub at given how sky high property values were to begin with). The median age of its housing inventory is 100 days, an entire month longer than the national average. New York's year-over-year rent variance and rental cap rate are nothing to snub at but are slightly below their respective national averages.
What data is this Rental Ranking Report based on?
To calculate the statistics found in the Q2 2015 Rental Ranking Report, All Property Management gathered data, including the most recent government housing and jobs data, for 75 metros across the United States. Specifically, we looked at home vacancy, capitalization, home value appreciation and job growth rates, changes in rental prices, and the median number of days properties have been on the market to determine which U.S. metros will give investors the highest returns on rental investments. Click here to learn more about the Rental Ranking metrics.
Should I invest in New York rental property?
Just like New York is known as "The City That Never Sleeps," the New York rental market should be known as "The Rental Market That Never Yields Poor Returns." It's unlikely that investing in New York rental real estate will ever be a bad bet.
Thinking about renting out a property in New York? Save time, avoid hassle and maximize your rental income by having a professional property management company operate your rental property for you. Click here to get a free quote from a local property manager or call 877-780-4510 to have the All Property Management staff get quotes for you.
All Property Management specializes in connecting rental property owners with professional property managers in communities across the United States. These property managers help set rental rates, advertise properties, screen and manage tenants, collect rent, manage vendor relationships and ensure compliance with local, state and federal housing regulations. They take the hassle and worry out of managing rental properties - all while maximizing rental property owners' rental incomes.