Housing costs are reaching record highs across the United States.
As population growth is taking place across metropolitan areas, demand for housing is outpacing the speed at which developers can keep up.
In New York City, Manhattan real estate has traditionally always traded at a significant premium to boroughs like Brooklyn and Queens. However, over the past few years, the cost of property prices in these boroughs has been rapidly accelerating. In some cases, Brooklyn waterfront properties in neighborhoods like Williamsburg and Greenpoint trade hands at higher prices per square foot than neighborhoods in Manhattan.
Jersey City is even becoming part of the mix, luring developers and residents from New York City. Have you seen signs calling Jersey City the "sixth borough"? I have. This is a telling sign of what is happening to property prices across New York City.
New York City is not the only city to witness this phenomenon. Of course you have other large cities like Los Angeles that are seeing similar trends, but the real shocker is that smaller cities like Nashville are experiencing this as well. I recently read an article on Bloomberg, titled The Affordable Housing Crisis Moves Inland which details this pattern. Housing affordability is no longer an issue that people living on the coasts are experiencing.
I've actually been down to Nashville three times in the past half year. It's a city with lots of charm, and specific areas like East Nashville have an artisan Brooklyn vibe. As the economies of cities like Nashville continue to draw workers from all over the country, the housing stock will continue to get depleted, forcing the prices of property upward. Over the past three years, Nashville real estate prices have increased by nearly 60%.
With housing prices continuing to increase across the country, affordable housing becomes an issue that needs to be considered and thoroughly planned out by local governments. In New York City for example, developers of new construction often need to provide affordable housing in order to get right to build their developments.
Also, neighborhoods that traditionally have not been expensive are seeing a record amount of investment and seeing property prices significantly creep up.
Take neighborhoods like Crown Heights, Bushwick, Bed-Stuy and Prospect Lefferts Gardens. In a sense, these neighborhoods represent New York City's "inland." These neighborhoods are quickly drawing in people from across the city, with a combination of cultural institutions, retail, restaurants and housing options.
Cities are working in different ways to address affordability. As long as more people want to live in cities, the more the demand for housing. As demand stays high and supply can't keep up, the more the price of real estate will continue to creep upward.