If you ask me, Queens as always been cool. That said, for a long time after the real estate market rebounded, Queensites hung out in their forgotten borough and watched patiently while properties in the far reaches of Brooklyn were snatched up at above ask prices by buyers with truckloads of cash. Well, to all of you who finally noticed what’s at the other end of the Ed Koch Bridge, we simply say “It took you long enough!” So, in a market which is still seller friendly but certainly cooling a bit, why is the Queens ripple still swelling into a – dare I say it – wave?
The biggest reason the real estate market is continues to swel in Queens is “stigma” – and by that I mean the removal of it. For many years I have been recommending Queens to buyers who were focused on Manhattan and Brooklyn. Not only investors and big-budget clients, but those with 20% down payments, low post-closing reserves, a price vs. size mismatch, those working in Midtown Manhattan, etc. Until mid-2014, nine out of ten of those buyers quickly dismissed my suggestion with the same response, “I would consider going further out in Brooklyn or even Upper Manhattan, but not Queens.” As a long-time resident and owner in Queens, I found the stigma Queens carried a bit strange and irrational. Nonetheless, it was definitely there. Maybe it was the wierd dashes we have in our addresses. Maybe the “Street | Road | Drive” thing was too much to deal with. Or, maybe – just maybe – Kevin James isn’t a likable enough King. In any case, it just wasn’t cool to live in Queens.
So, through 2013 and into 2014 buyers moved further and further out in Brooklyn into areas like Bed Stuy, Bushwick and Redhook looking for an affordable apartment to purchase, still refusing to consider established and accessible Queens neighborhoods like Sunnyside, Woodside, Jackson Heights, Elmhurst, Rego Park, Forest Hills, Kew Gardens, etc.
In early 2014 things started to change, and the migration of renters, buyers and investors from Brooklyn and Manhattan began. To be fair, some buyers relucantly agreed to purchase in Queens because it became painfully evident after losing their 7th “highest and best” that they were priced out of their target neighborhoods and/or couldn’t compete with the large down payments or all cash purchasers. However, others started to see the appeal after several articles were published about various Queens neighborhoods, making it “ok” to admit you wanted to (or were willing to) put down roots in a borough starting with a letter from the second half of the alphabet. As people heard the word “Queens” with a positive adjective in front of it or a glowing verb behind it – and took the opportunity to visit Jackson Heights, Forest Hills, Ridgewood, etc. – the stigma began to wear off. Clients began answering my suggestion to look in Queens with, “Ok, let’s keep it as a backup option” or even “Yeah, I’ve heard there is good value there!” These days, I say the word “Queens” to a client and they already have a list of neighborhoods they are considering. Now that the stigma is removed, it will not return. It is gone just like it is in Brooklyn, Harlem, Riverdale, the Lower East Side and many other neighborhoods once thought to be less desirable.
Transportation is another attractive quality of many Queens neighborhoods despite the old joke about the (N)ever and the (R)arely. In the game of Chess, the Queen is powerful and can move in any direction. Such is true with the borough of Queens when it comes to transportation. We can even get you straight to Brooklyn!…sometimes (thanks G Train). Although living in Queens will likely lengthen the commute for those working in the Financial District, for the hundreds of thousands working anywhere from Midtown to the Village, the subway commute is a dream come true. Whether you are living on the 7 Line (LIC, Sunnyside or Woodside for example), on the N/Q (Astoria, LIC) or on the E,F,M or R (Jackson Heights, Forest Hills, Rego Park, Elmhurst, for example), getting to Midtown is a breeze. The E and F – which believe it or not are relatively reliable (sorry L Train) -are express from LIC to Jackson Heights and Forest Hills and can get you to Midtown in 15-20 minutes. Queens is also incredibly friendly for those looking to find an airport. With express buses from Jackson Heights (directly to LaGuardia) the M60 from Astoria, or the E express to the AirTrain to JFK, it costs a fraction of the cost of grabbing a cab or an Uber and sitting in traffic on the RFK.
Convenience is nice and all, but let’s talk about your investment. There is no doubt about it, prices are rising in Queens and those looking to buy now wish they would have purchase a year ago. That is true in any rising market and very few are lucky enough to buy at the “bottom”. Heck, there are people in my building who bought their apartment 30 years ago with the spare change they found in their couch. But don’t let the rising prices stop you. They are still RISING. It is still very easy to find co-ops for less than $500/sq ft which is unheard of in most areas of Manhattan or Brooklyn. Add to this the fact that we are not talking about “up-and-coming” neighborhoods for the most part. Many of the newly discovered neighborhoods in Queens are well-established, historic, thriving communities. Still skeptical? Ask someone in Bed Stuy if they thought their brownstone would sell for over a million dollars 10 years ago. There is a lot of room grow when it comes to pricing in Queens.
Capitalization Rate (Cap Rate) is another reason Queens is getting more attention and attracting investors. In short, the capitalization rate is the way investors determine what the rate of return will be on a particular asset – the higher the “cap rate”, the better. It is calculated by dividing the net operating income of a property by the value of the asset (purchase price). Of course, the cap rate is not the only factor when one considers an investment property in NYC (appreciation is typically a bigger driver) but – despite the all-time high rents in NYC – the prices for condos, single-family and multi-family homes in many neighborhoods of Brooklyn and Manhattan have risen to a level that cannot be supported by the rental income potential of the property. In fact, recent data shows that rental prices are beginning to stabilize, which means the Cap Rates are going to continue to fall as purchase prices rise. In addition, many new development projects were built with the 421-A or J-51 tax abatements which soon will begin to “step up” to the full effective tax rate and significantly increase the overall carrying costs/operating expenses. Conversely, with the stigma of Queens gone, many neighborhoods in Queens continue to see rising rental prices due to the relative affordability to Manhattan and Brooklyn, and the “gap” between the prices of comparable apartments.
So what are the barriers you ask? Good question. Well, inventory is definitely an issue and a common complaint among buyers – especially those looking for 2 or 3 bedroom apartments. The other barrier continues to be a brokerage community in transition (see my post from July 2014, The Queens Drag – https://eirikgislason.com/2014/07/23/queens-drag-is-the-real-estate-community-in-queens-representing-their-owners-or-their-own-interests/) specifically brokers who try to hide their listings or collect the “full commission” rather than do right by their seller and offer to share the commission with a buyer’s broker if they bring the most qualified purchaser and the best bid.
The good news is that in the time since my post on the Queens brokerage community, things have gotten a little better. Due in part to the fact that larger, established brokerage firms are taking an interest in Queens (a leading indicator to be sure), listings are being represented by more REBNY (Real Estate Board of New York) member firms. The result is more listings with agents who invite the rest of the brokerage community to participate and bring buyers, better educated sellers in terms of the benefits of offering a commission rate which allows their broker to split the commission with the buyers’ agent, and professional, accurate and far-reaching advertising and marketing which attracts a large set of potential customers. Yes, that drives more demand and therefore higher prices, but at least you can find the apartment now AND have representation to help you through the process!
In closing, you should know I am biased toward Queens. I have lived in Astoria and Jackson Heights for 15 years and have enjoyed the “hidden gem” that is Queens for a long time. But, as a real estate professional my analysis of Queens as an investment and/or home is unbiased and genuine. You are welcome to visit anytime. If you need directions, just jump on any uptown E, F, M, R, 7, N or Q train and get off once the train goes above ground or the subway stops start having strange names ending in Road, Drive, or Terrace. Don’t worry, you will get used to it.
A few articles about Queens you might want to read…
My name is Eirik Davey-Gislason and I work in real estate in New York City. Unreal Estate is an opportunity for me to educate my audience and have a little fun in the process. By sharing, preparing and advising readers on what to expect, what is normal, what is right, and what is wrong, I hope to do my part to give valuable guidance, expose the wrong-doers when necessary and shape the future of this dysfunctional thing we call NYC Real Estate.