New York City
The story in Manhattan continues to be about high prices on Manhattan, which continue to rise to astronomical levels. Manhattan condo prices rose 8.2% to USD1.29 million in the year to Q3, while average rental rates were up 4.4% over the same period. Demand remains high, with the vacancy rate falling 0.5% to a very low 2.3% as of November. The trend for ultra-luxury segment projects remains in place as developers target the UHNW buyers who can still afford Manhattan prices; as such, the area’s average sale price per square foot has surged 30% over the last year, while overall inventory was down 11.4% in the year to November.
All this makes Manhattan a di¬fficult market to enter for the majority of homebuyers and investors. Looking to the city’s outer districts presents excellent alternatives for investment, with Brooklyn our top choice going forward. Inventory in the borough is 9% down on the long-term average while the district’s median home price rose 4% in the year to Q3, with rental rates up 5.3% over the same period.
Certain Brooklyn neighbourhoods are showing excellent performance and potential, particularly Williamsburg and the DUMBO area that is at the heart of what has become known as the Brooklyn Tech Triangle. With the median Brooklyn price 32% lower than that in Manhattan, the borough presents an excellent option to benefit from the strength of the New York City property market at a much more manageable entry price.
A clear marker of Chicago’s continuing rebound has been set by the city’s thriving technology sector, which has continued to grow through 2014 after recording job growth of 19.3% between 2011 and 2013. And technology is far from the only Chicago business sector to be recording good numbers, with the unemployment rate for the city’s metropolitan area having fallen to 6.3% by October, the lowest level seen since July 2008.
Positive public opinion in light of this growth has seen the University of Michigan’s Consumer Sentiment Index rise to its highest level in seven years. Stability is the 2015 watchword on the Chicago property market. After 14 consecutive months of double digit price growth through to May 2014, condo price growth slowed in the latter half of the year in line with national trends. Prices remain 24% lower than peak, so investors looking to the long term can expect this growth to continue at a steady pace that avoids the risks of over-inflation while still delivering healthy returns.
In Miami, the Downtown district continues to draw the most attention from an investment standpoint, with the area’s increasingly attractive urban living winning many converts from the Miami Beach district and the city’s other suburbs. A number of large-scale projects are in progress in this part of Miami, including infrastructure work that is increasing the area’s transit options, and it seems clear that the Downtown district will continue to expand its residential demographic going forward.
Prices in Miami continue to rise at excellent levels, with September’s 10% year-on-year growth representing the city’s 23rd consecutive month of double digit year-on-year price growth. Despite this, the market remains 33% below peak. The situation on the condo market is even more favourable, where prices have risen 18.2% in the year to Q3. The market remains driven by equity rather than lending, a good sign for ongoing stability, with 67.8% of the county’s condo closings in October 2014 being all-cash transactions. On the rental scene, prices across the great downtown area have risen 6% over the past nine months. This is driving the increased investment yields that have been the key factor in Miami’s emergence as the latest top target of Chinese HNW investors.