One of the most wanted cities in terms of real estate is New York, with it’s monumental skyscrapers, beautiful parks, and exquisite cuisine – who wouldn’t want to live in the big apple? But, the problem with having such a high demand for real estate is that prices start rising, and it’s no surprise that real estate in NYC is exponentially increasing when it comes to pricing. In an article published by Business Insider, writer Josh Barro explains many other reasons as to why purchasing real estate in New York is so expensive. Here’s a recap on what he relayed:
First, there is limited space. Remember, New York only has so many square miles of land, especially in Manhattan where buildings are dense. Combine this with the amount of people who want to live in Manhattan from all around the world, and competition increases. When there is more competition, prices rise.
Second, there are an abundance of zoning rules that inhibit real estate supply. Barro explains, “Of course, you can get more apartments on a given amount of land by building taller buildings closer together. And compared to most cities, New York is very dense. But it could be even denser,” (Barro, Dear New Yorkers: Here’s Why Your Rent is So Ridiculously High).
Lastly, rent control raises rent prices if you are not rent controlled. This may sound confusing at first, but it’s really quite simple. Tenants that live in rent controlled apartments have incredible deals on their rent and most likely will not be moving out anytime soon, especially since the average rent for available apartments in NYC is more than $3,000. Barro notes, “In Manhattan below 96th Street, 35% of rent regulated apartments are occupied by a tenant who has lived there for more than 20 years. Less than 3% of market-rate tenants have been around that long,” (Barro, Dear New Yorkers: Here’s Why Your Rent is So Ridiculously High). To keep it simple: cheap apartment exist – you just can’t get one.
For more information on the real estate market in New York City and why rent prices are soaring, check out Josh Barro’s article on the Business Insider here.