NYC Real Estate is Ready for an innovator
The New York Observer has an amazing post pointing out that the housing bubble we are currently experiencing in New York City simply doesn’t account for the housing needs of most New Yorkers. It’s not hyperbole to describe this as a watershed moment for New York real estate and an absolutely critical moment to “disrupt” the typical way of renting/selling real estate here. Huge change are afoot, and the market is all but begging for it.
Current Housing Stats
Let’s begin with the current housing stats. Residential construction in New York City soared by 50% in 2013. On the face of it, that’s good news. More places being built means more inventory. More inventory means less of a spike in home prices (e.g. not frothing at the mouth when you see a new listing and pay 10% over the asking price just to get your hands on it.) But here’s the issue :
“The bad news is the steep run up in spending will actually yield fewer units—20,000—than the 30,000 per annum pace that was hit several times in the last real estate cycle.”
Why, you ask? Because most of the money being spent is being spent on ultra high end luxury housing like this. And why? Because developers are making a killing on a price per square foot basis.
So where does that leave the rest of New York City? In dire straits. And that’s why it’s such a great time for someone to jump into this fray and change things up. I’m pretty sure that a perfect storm is about to occur in New York City real estate:
- Lack of Affordable Housing. Our vacation loving New York City Mayor ran on an agenda of creating 200,000 affordable housing units in New York City. That’s, uh, not really going so well. Most people also either don’t make enough for affordable housing, or make too much (you know, like more than $24,000 a year). There’s also the small issue of fraud in affordable housing in NYC that’s not going anywhere.
- The changing demographics in New York City. Nearly 1/2 of New York City’s population is unmarried and has never been married. Everyone is single. And I’ve been on enough horrible dates with women to ensure some will stay that way. The point is that single people in New York City don’t necessarily need 1 or 2 bedrooms. They’ll do just fine in a studio…or a microapartment. I would bet my last dollar that most people would rather live in a well designed 400 square foot apartment at the age of 37 than share an apt with a roommate who does this:
“One time, I woke up in the middle of the night, and she was sitting on the edge of my bed talking to me in a creepy whisper voice, saying, “I’m so mad, Julie. I’m so mad.” I don’t know what she was talking about, but I tried to usher her out as quickly as possible.“
- Tech is changing everything. Remember when you always wanted to lease a car? Well, now you can get a Zipcar for a fraction of the price when you need it. It’s changing the way people think about cars and car makers are taking notice. Remember when you had to hail a cab? Everyone said no one would be able to touch that industry. Well, now there is Uber and Lyft and many others in the pipeline. Remember when you needed to have that large office and overhead for your business? Well, now there is Regus (ew) and WeWork. Again,innovation and lower cost structures which are charging the way people act in industries that were previously untouchable. There is absolutely no reason at all to think NYC housing is any different.
NYC is primed for a complete upheaval when it comes to housing. Every condition is there. There is an completely untapped market with huge upside and the ability for innovators come in and fill that vacuum very quickly and relatively painlessly. We’re very soon going to come to a breaking point where the 29 year PR rep or the 33 year old freelance writer is going to refuse to move to South Brooklyn for a 1 hour commute or take in that 5th roommate with a small drug problem. They’re going to pay a few dollars extra to get their own micro apartment in a neighborhood that appeals to them. The question is who is going to be the first who does this?