English text by Irene Luo
Pictures courtesy of Daniel Gale Sotheby’s International Realty
With the overall U.S. housing market cooling down, where is New York City’s housing market headed as we enter 2019? And what effect will Amazon have, given the recent announcement that the company will place its second headquarters in Long Island City, Queens? With many construction projects still underway in New York City and as housing inventory builds, which areas are most likely to increase in value in the future? Here is our take.
In November 2018, Amazon announced plans to place its second headquarters in Long Island City, Queens, New York. (Shutterstock) 
(Shutterstock)
NYC Housing Market Cooling
Following the U.S. subprime mortgage crisis, the New York City housing market has slowly warmed up and started to experience major growth. Housing prices have slowly risen in the last 10 years. Initially, market inventory could not satisfy demand, so many developers constructed new buildings in the past few years, leading to an increase in housing inventory on the market, especially luxury units. Currently, apartment construction in the greater New York area is at a 30-year high. In 2018, there were over 60,000 new units under construction. With the influx of apartments on the market, New York City’s housing market is softening. The market is balancing itself, says Donna Rubertone, the sales manager and associate real estate broker at Daniel Gale Sotheby’s International Realty (DGSIR).
Home buyer demand still exists, Rubertone says, but buyers are waiting for better prices. Million-dollar condos are still in great demand in Manhattan and have even led to price wars. Luxury condos with relatively high prices tend to stay on the market for longer periods. So in terms of prices, the market is adjusting, she says.
Deirdre O’Connell, CEO of Daniel Gale Sotheby’s International Realty.
Donna Rubertone, sales manager and associate real estate broker at Daniel Gale Sotheby’s International Realty.
Impact of Amazon’s HQ2
In November 2018, Amazon announced it would establish a second headquarters in Long Island City, Queens, and it’s estimated that 25,000 employees will work here. In the week after Amazon’s announcement, there was a major spike in buyer interest in Long Island City, with a 519 percent increase in search traffic, according to statistics from StreetEasy.
Rubertone says that as we look at the effects of the Amazon headquarters announcement on the housing market in Long Island City and the entire Queens borough, it is important to remember that the housing market in Queens in the past 10 years has always been pretty steady. Besides the enthusiasm brought by Amazon, Long Island City on its own has unique advantages. The location is convenient, safe, and trendy. Long Island City is separated from Manhattan only by the East River, which can be conveniently crossed by just one or two stops on the subway. Those who ride the subway past Long Island City can see over 40 new buildings, many with great amenities that attract young white-collar New Yorkers.
According to Deirdre O’Connell, the CEO of DGSIR, the new Amazon headquarters will not only affect the housing market in Long Island City but also other places in New York City that Amazon employees can easily commute to. Based on the experiences of DGSIR affiliates in Seattle, Amazon employees will seek a diverse variety of neighborhoods. They might choose to live anywhere from Queens to Manhattan to the suburbs of Long Island. To offer information about the area for current and future Amazon employees, DGSIR and its affiliates have collaborated to build the online reference site MyHQHome.com. It will include comprehensive information and market analysis of the neighboring areas for the next two Amazon headquarters (one in New York City and the other in Arlington, Virginia), including information about schools and education, transportation, food and drink, moving services, and so on.
Rubertone emphasizes that the effects of the new Amazon headquarters will not happen overnight, but instead will be felt over the course of the next few years. The company’s expansion will open up many new job positions in New York. And these new employees will have demands for housing, food, transportation, hospitals, schools, housekeeping services, and more. They will propel Long Island City to grow its service industry and bolster Queens’ overall economic development.
Besides Amazon, Google also announced in December 2018 that it would spend $1 billion to create a new campus in downtown Manhattan. The 1.7-million-square-foot campus called Google Hudson Square will allow space for 12,000 new employees. With tech giants choosing to expand operations in New York, O’Connell said it has allowed the city to also become a tech hub. Although it’s the most central city on the east coast of the United States, New York has never been widely known for technology. But by gathering talent from around the world and with the help of government tax cuts and other support, New York City has also become a hot location for tech companies, and it seems the city may become the Silicon Valley of the east coast. But unlike Silicon Valley, New York is a more international and multivariate city, a major hub for finance, fashion, media, marketing, and cultural institutions. Although the growth of the tech industry will greatly affect the housing market in New York, technology will not become the only major factor that determines trends in the market.
The Effect of Subways
It is widely known that the convenience and proximity of public transportation directly affects the value of real estate properties in an area. New York City’s public transportation is ranked number one in the United States, with obvious implications for the city’s housing market.
Among the various forms of public transportation, the subway is the fastest, most convenient, and most widely used. So the plans of the Metropolitan Transportation Authority (MTA) can directly affect housing prices in different areas. Public transportation was inconvenient in the area near 2nd Avenue on the Upper East Side, for example, because there was no nearby subway; as a result, the housing market in this area suffered for many years. A decade ago, the city started building the Second Avenue subway line to lead to the Upper East Side, and the first phase of this new line opened up in January 2017. According to a Forbes report, the prices of condominiums and co-ops near the new subway stations have increased by 6 percent since then. The second phase of this subway line is planned to be completed around 2029, and when that time comes, there will likely be a further increase in prices. Investors can think about entering the market early and holding on to the property until the second phase of construction is completed to receive greater returns.
In 2018, it was announced that service on the L subway would end beginning in April 2019. This caused the property values and rental prices along the subway line, such as in the Williamsburg neighborhood of Brooklyn, to decrease. L-train service will resume after around 15 months, and when it is reopened in 2020, property values along the subway line will rise. Right now, buyer bargaining power in this area is great, especially for more luxurious units. This might be a great time for investors to enter the market.
Note: The information presented in this article is for reference only. For specific advice on real estate investments, please consult an expert. For information on the areas around the new Amazon headquarters, you can visit MyHQHome.com, created by DGSIR and its affiliates.
