(Bloomberg) — Residential real estate is poised to lead a comeback in New York City property values amid a housing shortage and still high interest rates capping sales.
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The market value of the city’s more than 1 million properties is projected to rise 5.7% to $1.6 trillion, in the upcoming fiscal year that begins on July 1, according to a tentative assessment roll released by the Department of Finance Wednesday. Last year, values rose just 0.7%, reflecting the Federal Reserve’s aggressive rate hikes.
The picture is even better for coops, condos and rental apartment buildings where market values are projected to rise 7.3%. Rents surged after the Covid-19 pandemic, driven by a dearth of inventory. The median rent for a one-bedroom apartment in New York City rose 21% from Feb. 2020 to September 2024, according to the city comptroller’s office.
Brooklyn is expected to lead with an estimated market value jump of 9.4% as rental apartment values in the borough climb 15%. The data reflect real estate activity from Jan. 6, 2024 to Jan. 5, 2025 as well as expense information for commercial properties during calendar year 2023 and submitted to the Department of Finance in 2024.
Real estate taxes are the biggest contributor to New York City’s coffers, providing almost one-third of the revenue for its $115 billion budget. Property taxes are also the primary source of funds backing the city’s approximately $42 billion of general obligation bonds.
Citywide assessed value — the portion of market value that is taxed — rose by 3.9% to $311.2 billion, according to the Department of Finance’s projections.
Single-family property values are poised to rise about 6%, with homes in Staten Island showing the biggest increase.
There are even signs of recovery in the closely watched commercial real estate sector. With more workers returning to the office the total market value of commercial properties are expected to climb 3.8% to $339.5 billion, while assessed values are projected to rise by 2.9% to $135.9 billion. Trophy office buildings are leading the bounce.
A number of Wall Street firms have moved to bring back workers five-days a week in-person, that’s brought New York office visits to just 14% below their pre-Covid levels in October, according to Placer Ai estimates.
Still, citywide office vacancy rates remain high around 23.4% in November, down slightly from 24.3% mid-year, according to the city comptroller.
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Market values of offices rose 2.7%, while retail buildings and hotels registered increases of 2.5% and 5.9%, respectively.
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