Why Homes Feel So Expensive in NYC: Beyond the Headlines

Scrolling your feed, you’ll encounter claims that big investors are the reason prices remain sky-high, but the data says otherwise. Recent data tells a different story. Only about 2.8% of all home purchases in the past year were made by major institutional investors. At the same time, regular buyers, including professionals, families, and international clients, have accounted for the vast majority (about 97%) of transactions in New York City’s influential real estate market.​

At the luxury level, the narrative shifts. Instead of focusing on investor speculation. What matters most are supply issues, evolving regulatory frameworks, and rapid changes in consumer sentiment. Understanding today’s market means looking far beyond the headlines, because for genuine buyers and sellers, the story of home prices, competition, and opportunity is more complex than any social media trend or mainstream soundbite suggests.

The Hidden Vacancy Challenge

The majority of headlines point to investor activity, but the real driver of supply and demand in New York City is far more nuanced. According to market analysis and commentary from Jason Haber, a notable agent with Compass, an extraordinary number of our city’s rent-stabilized apartments—over 50,000—are currently vacant. The reason is rooted in regulatory and economic obstacles: recent changes in rent laws (notably the 2019 HSTPA reform) have made it financially unviable for many owners to renovate or rent these units at the below-market rates required by law.​

Landlords, facing strict rental caps that often don’t offset renovation costs, are leaving these units empty rather than operating at a loss. This “invisible vacancy” is not just an administrative quirk—it’s a key force shaping the competitive landscape for every home on the market.

What It Means for Buyers and Sellers

For buyers, this hidden shortage means that the apparent number of available homes is misleading. There’s more demand chasing fewer truly marketable units—particularly among free market rentals, co-ops, condos, and townhouses. These segments, especially luxury properties, experience sharper rent growth and stiffer competition as a direct result of this policy-driven scarcity.

For sellers, artificially tight supply—created not only by market forces but by regulatory bottlenecks—enhances your leverage, particularly when selling move-in-ready, free-market properties. Sellers can anticipate more competitive offers and, in many cases, a faster transaction timeline.

For investors, recognizing and strategizing around these hidden vacancies is critical. As policy continues to evolve, assets that can be turned over to market rate or upgraded hold substantial value, and timing becomes paramount when assessing opportunities.