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Chaos, Rewarded

Buy now, get a new subway later.


Construction at the 72nd Street station.  

Now that the first phase of “the line that time forgot” is getting real, those keeping the faith may be rewarded. To quantify that value, Jonathan Miller, president of the appraisal firm Miller Samuel, examined rentals and sales along Second Avenue (and a block east and west) since 2009, when the subway line started to seem viable. (A word about methodology: He excluded sales of new buildings, which tend to skew numbers.)

How much have prices risen so far? Real-estate values along the avenue have been, by his account, “remarkably stable” since 2011—there was a dip from 2009 to 2011, which was partly attributable to a market teeming with inventory, plus an economy still in recovery. Since then, though, there’s been an ascent. From 2012 to 2013, for instance, median rents rose by 50 percent, sales prices by 27.8 percent. Even after drilling had begun in earnest and unsightly “muck houses” (so named because they stored debris) began to rise on some blocks, obstructing sidewalks, windows, and entire buildings, prices still inched upward. (In comparison, during the same period, the Upper East Side saw median rents dip by nearly 3 percent and sales prices flatline.)

So is it too late to make a move? No. Miller thinks you’ll “see continued growth over the next couple of years, and it might outpace the overall market because you’re getting closer to this transportation hub going in.” For better deals and a bigger payoff, consider going east of Second Avenue. “The eastern half of the East Side has potentially more upside over the next five to ten years than the balance of the neighborhood,” simply because it’s currently that much more inconvenient, he explains.

But what about those recent funding rumors? As for news earlier this month that the money allotted for the rest of the T line below 63rd Street may be in jeopardy, Miller says it won’t likely dissuade buyers, who would still benefit from new stations connecting them to other lines. As for renters, unless they’re planning to stay for the long haul and get a good deal in the meantime, they may decide the construction headache is not worth it.


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