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NYC’s volatile housing market

The ever increasing market price for apartments in Manhattan has been affecting the number of residents that move there. Meanwhile, the reasonable prices in NYC’s other boroughs (Brooklyn, Queens especially) are starting to look more appealing. The articles mention how the value of the houses or apartments change drastically over time based on demand, which affects the market value. NYC apartments have been in “steady price appreciation since 2009 and huge price gains since 2013, the New York City real estate market is no longer in growth mode.” After the drastic increase in living spaces, residents are forced to foot a higher bill than they are used to. Because of this change, people are less likely to invest in housing that costs a lot more for what they’re getting. This will make them question their other options, such as living in cheaper areas that are less desirable but have an advantage over the competitive housing prices in Manhattan.

Tying this back to the market clearing prices lecture: Although the apartments in Manhattan are more coveted than the apartments in Brooklyn, this can change once the prices go up. If the prices go up, the value of the apartment in Manhattan will go down and could match the value of the apartment in Brooklyn. The buyer would then have a 50/50 chance of choosing either apartments instead of going for the one in Manhattan 100%. In order for Brooklyn to maintain or increase the number of buyers, their price can’t increase more than Manhattan’s. The article states that “sellers must price their properties more appropriately to increasing the number of interested buyers.” Renting or owning a home has its own ups and downs regarding market value. For instance, the landlord is dependent on how the buyer will value his apartment. If the price of the apartment is way above the buyer’s range, then the value will go down and become less favorable. For the person renting the apartment, they must find a place that is in their price range and having it in a desirable location. That way, they can optimize what they are paying for and be satisfied with their purchase.

x = manhattan

y = brooklyn

Price Apartment Buyer Value of x Value of y
0->6 x a 10->4 7->5
0->2 y b 11->5 7->5

http://www.nydailynews.com/life-style/nyc-real-estate-market-cooling-good-time-upgrade-article-1.2680450

https://ny.curbed.com/2017/7/6/15927526/manhattan-homes-for-sale-market-reports-q2-2017

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