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- Old money v. new money is a debate as old as New York.When it comes to housing, luxury apartments are giving older buildings a run for their money.A boom in apartment construction has meant new luxury might be more attainable.
Tay Ladd watched "The Gilded Age," so she gets the old money vs. new money divide.
The debate might be as old as New York. The TV show's characters covet storied old townhouses, while contemporary buildings are considered gauche.
Ladd knows what side she's on. She prefers a newer "luxury" apartment building filled with communal amenities, like fitness classes or spas, that classic pre-war apartment buildings almost never have.
And at least in New York City, the economics have flipped as well. Newly built housing is seeing slower rent growth than the pre-war apartments that have long dominated the city's rental inventory.
"It makes a lot of sense why those older buildings, because of prestige and history, cost so much, but you're not getting half of what you're getting with the newer developments, where you literally have every single thing that you need at home — and sometimes for even cheaper," said Ladd, a millennial Manhattan-based lawyer who posts under @TheCorporateDogMom.
It's a dynamic that's playing out across New York City and the rest of the country. For years, glassy high-rises chock full of amenities seemed to be the territory of influencers and the ultra-wealthy.
Now, developers of a deluge of newly built luxury buildings are clamoring to get you in the door, while some older homes with few amenities in more historic neighborhoods are becoming something of a status symbol.
A luxury apartment boom
The US is coming out of an apartment construction boom. In 2024, a record 518,000 new apartments were completed across the country — up 9% since 2023 and 30% since 2022. And this year, about 506,000 new apartments are set to hit the market, although a slower construction pipeline means that the current wave is expected to ebb in the next few years.
In New York, for instance, new construction has increasingly made up a greater share of rental inventory.
The surge in new multifamily building construction has led developers to compete for tenants, in part by one-upping each other on amenity offerings. Fancy amenities can also help developers justify higher rents, as land prices stay high and construction costs rise.
"What does a developer do to win those tenants? It's all about the amenity wars," Miller said. "They're the easiest, quickest thing a landlord can do to differentiate."
Because developers have deeper pockets than mom-and-pop landlords, multifamily buildings can also offer discounts in the form of a signing bonus and a few months of free rent to lure new tenants. That keeps their sticker prices high but effective costs lower.
Indeed, net effective rents — which factor in any concessions that renters might have negotiated — are actually higher in units built from 1946 to 2009 than they are in the newest buildings.
Ultimately, the laws of supply and demand determine how much rent costs. As the supply of new apartment buildings, many of them filled with amenities, has soared in recent years, rents have moderated or even fallen in cities across the US.
In New York City, the newest and oldest apartments are the most affordable these days, while those built in the second half of the 20th century are priciest, and rent growth for new builds was far slower than older housing stock.
Despite New York's new crop of luxury buildings, the city is still mired in a severe housing shortage. And pre-war housing, which includes the storied "Gilded Age"-esque buildings, is still seeing strong rent increases.
"As the rental market in Manhattan tightens up because of high mortgage rates keeping would-be buyers in the rental market — and just because of decades-long undersupply of rental apartments — inventory in Manhattan has been declining for at least 16 consecutive months since March 2024," Kenny Lee, a senior economist at StreetEasy, said.
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In some cities, a deluge of new apartments has even caused rents to decline. After developers in Austin raced to meet surging demand for new apartments in the Texas city during the pandemic years by building thousands of new units, rents plummeted more than 20% from their peak. "In the rental market, you could almost pick any midsize city, and as a general rule, there's been overbuilding," said Jonathan Miller, who leads the real estate appraisal and consulting firm Miller Samuel, told Business Insider.
As new buildings dominate the available inventory in New York, many older homes have seen their relative value rise. Their supply isn't growing, and their locations are often more desirable than the newest construction. A brownstone might not have a 24-hour doorman or a rooftop grilling area, but it is more likely to be on a historic block or in a neighborhood with better public schools or proximity to parks and libraries.
"A lot of the newer buildings are not in the central locations in Manhattan," RentHop CEO Lee Lin told Business Insider. New buildings tend to be built in neighborhoods with cheaper land values and fewer wealthy homeowners to push back on new construction, housing researchers have found.
Ladd also attributed the popularity of luxury buildings, especially among younger folks, to the pandemic, which was the catalyst for her move into her current place. For some renters, the amenities have become the draw.
"I think a lot of people left New York just because they weren't living in great places and they realized that, oh, if I'm not going out and doing things, I don't actually love where I live," Ladd said. "And I think now post-pandemic, a lot of people are pushing for these types of amenity buildings where you literally have everything that you need at home."
