The foreclosure rate in New York City fell by 0.2% year over year and sits at 1.2% -- a sharp decline from 2016. Though many landlords struggled with non-paying tenants, protections like forbearance have stopped many property owners from falling delinquent on their mortgages, which led to a downtick in foreclosure rates. Of course, the fact that foreclosures were banned beginning in late March helped as well. It's worth noting, however, that on a national level, the foreclosure rate is sitting at 0.3%.
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Despite a high unemployment rate fueled by the pandemic, New York City is home to a number of thriving industries:
- Investment banking/financial services. New York City houses a number of leading investment banking and financial firms, including Goldman Sachs (NYSE: GS), Citigroup (NYSE: C), Morgan Stanley (NYSE: MS), American Express (NYSE: AXP), and JP Morgan Chase (NYSE: JPM). These firms largely operate offices in Downtown and Midtown Manhattan.
- Hospitals/healthcare. New York City is home to a number of renowned hospital systems, including New York-Presbyterian, NYU, Mount Sinai, and Lenox Hill. These hospitals' main campuses are located throughout Manhattan but have additional locations in the remaining boroughs as well.
- Media and entertainment. There's a reason New York City has been dubbed the media capital of the world. The city is home to NBCUniversal, The New York Times Company (NYSE: NYT), Thomson Reuters Corporation (NYSE: TRI), WarnerMedia, and ViacomCBS (NASDAQ: VIAC). It's also home to well over a dozen notable magazines and record labels. These companies are located throughout the borough of Manhattan with a large concentration in Midtown.
- Technology. New York City houses a number of notable tech companies, including Spotify (NYSE: SPOT), Bloomberg, and IBM (NYSE:IBM), which all have offices in different parts of Manhattan. Google (NASDAQ: GOOGL) also has a major presence, with an office in Manhattan's Chelsea neighborhood, and in recent years, tech firms have increasingly begun setting up shop in Brooklyn.
Schools of note
New York City is home to a number of well-known colleges and universities, all of which present a real opportunity for real estate investors to capitalize on the need for student housing.
Situated in Manhattan's Morningside Heights neighborhood, Columbia University is a renowned learning institution that's part of the well-respected Ivy League. In 2020, total enrollment reached over 31,000, which includes full-time and part-time students.
New York University
NYU is a celebrated private institution that draws in students from all over the country. It's known in particular for its business school and performing arts program. NYU's campus includes over 171 buildings spread between Manhattan and Brooklyn. However, its central location is its Washington Square campus located in the middle of Greenwich Village. As of Fall 2019, NYU had over 58,000 students enrolled across its various programs (including undergrad as well as graduate).
City University of New York
The City University of New York, or CUNY, is a network of schools with locations through the five boroughs. Some of its more notable campuses include Brooklyn College, located in the mostly residential Midwood neighborhood, Queens College, located in the similarly residential Kew Gardens Hills area, Hunter College, located in Manhattan's Upper East Side, and Baruch College, located in the Flatiron District. All told, there were over 271,000 students enrolled across the CUNY network in 2019, with the largest number of students attending Baruch, followed by Brooklyn College.
Neighborhoods of note
New York City has several hundred distinct neighborhoods across its five boroughs, so nailing down a specific one to focus on can be tricky. Here are a few notable neighborhoods worth looking at.
Located right above Manhattan's Upper West Side and home to both Columbia University and its sister school, Barnard College, Morningside Heights is a prime spot for investors due to its high concentration of students and academic professionals. The neighborhood runs from West 110th Street to West 125th Street and is encased by two well-known parks -- Riverside and Morningside.
Perpetually trendy Greenwich Village is a smart investment choice due largely to the NYU campus that's located smack in the middle of it. With its abundant restaurants, cafes, bars, and shops, it's also a popular stomping ground for new NYC transplants, and seeing as how it's less than a 20-minute subway ride away from both Midtown and Wall Street, it's a prime spot for young professionals.
Greenwich Village runs from Houston Street at its southern point to 14th Street at its northern point, and its center is the famed Washington Square Park. Though rents have plummeted recently in Greenwich Village, the median home asking price declined 16.5% year over year, so now may be a good time to scoop up properties on the cheap.
The Upper East Side
Manhattan's Upper East Side is known as a residential area -- one where families frequently own their own apartments. So why invest there? It's simple. In the wake of the coronavirus pandemic, families have been more apt to flee the city in search of more square footage. As such, the Upper East Side saw the most declines in home prices this past November, which means now's a good time to scoop up properties at a relative discount.
Furthermore, because the neighborhood is more family-oriented, it offers investors a key opportunity to appeal to renters with higher budgets and income. And families tend to be more stable tenants, which means investors can enjoy income stability and less turnover.
The Upper East Side is also a prime spot for medical professionals to take up residence given its proximity to New York-Presbyterian's Weill Cornell Medical Center and Lenox Hill hospital. Plus, there's the potential to house Hunter College students, many of whom can't secure campus housing given the limited supply. The Upper East Side runs between 59th Street and 96th Street, and it offers easy access to Central Park.
Battery Park City
Located on the west side of the southern tip of Manhattan, Battery Park City is a residential community that's adjacent to the Financial District. And that alone makes it a good choice for investors. Not only does it offer easy access to Wall Street jobs, but it's close enough to the financial district that renters can walk to work without having to take the subway. And given the number of people who may seek to do so on a long-term basis even after the pandemic ends, that's a key selling point.
Short for Down Under the Manhattan Bridge Overpass, Brooklyn's DUMBO neighborhood features a host of trendy restaurants, cafes, and shops, all the while offering easy access to lower Manhattan and its many jobs. It's also home to 25% of New York City-based tech firms, making it a convenient location for those who want the option to bike or walk to work.
The Millionacres bottom line
Investing in New York City residential real estate isn't for the faint of heart, and in the near term, there will be challenges due largely to the fallout of the coronavirus pandemic. But New York City won't stay dark forever. Once the pandemic ends, nightlife will open back up, office buildings will reclaim their relevance, and renters will once again clamor for homes to be part of the action. Given that there's a decent supply of housing available, now's a good time to explore the market.
New York City has a strong history of overcoming challenges. It did so after 9/11, and it certainly has the potential to show its resilience in the wake of the pandemic.