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Guide to New York City Homebuying

Here are the essential facts before you start a NYC house hunt

Living area. A table is flanked with various chairs. White kitchen cabinets are available. A wooden staircase runs along one side of this room. An exposed brick wall is found on the opposite side of the room.

It can be daunting to buy a New York City home, especially after taking a look at the numbers. According to Douglas Elliman’s Market Reports, Manhattan’s median sale price is just below $1 million. Brooklyn’s median sales price has increased to $790,000. Queens median sales prices have increased to $600,000. Sellers typically require a 20% down payment to list a property. This means that you will need at least $120,000, if not more.

According to the most recent census survey, NYC’s median income is just above $57,000. With these numbers in mind, it can be difficult to buy a home.

There is good news. Inventory (e.g. The number of available apartments continues to rise, and buyers often have the advantage in negotiating the best deals. Stephen Geller, a Corcoran broker, said that the real estate market is experiencing a decline lately, particularly in Manhattan. Prices are likely to fall further. Although you might not be able find a townhouse, there are thousands upon thousands of apartments available on the market. If you’re willing and able compromise on size, you might be able snag a deal.

What are the essential things you should know about NYC home buying? This guide is intended to simplify the process and provide additional guidance for first-time buyers as well as those who are looking for more information.

What is the average cost of a NYC home?

The short answer is: A lot.

According to Zillow, the median asking price for homes on the market today is $779,000 According to Zillow, the median asking price for Manhattan homes was $1.6million in November 2019. In Brooklyn, it was just over $969,000.

The 2008 recession has seen a significant rebound in NYC home prices. Experts predict that prices will drop in Manhattan and Brooklyn due to the record-breaking number of apartments being built.

It is so expensive.

Jonathan Miller, real estate expert, says that New York City’s high cost is not a new phenomenon. The city has been a bastion for wealth for more than a century, despite fluctuations over the years. You can read his thoughts here.

Miller states that the most recent price rise in expensive real estate was after the 2008 financial crisis. This occurred as markets started to recover. Developers went on a building spree as capital poured in from all over the globe. Due to the city’s limited space and high construction costs, as well as the high land values, developers chose to build luxurious developments, such the ones on Billionaires’ Row. This drove up the prices throughout the city.

“New York City has always been affordability-challenged, but this most recent housing boom has only exaggerated it further,” says Miller.

Corcoran’s Geller says that being the cultural capital of the globe also has a certain cache. He explains that there is a premium for this and people historically have been willing to pay it.

What type of houses can I purchase in NYC?

Potential NYC buyers have a variety of options for homes to choose from:

Condo: You own the entire apartment and a portion of the common areas of the condo building (e.g. the gym). Condo buildings will be managed by a board. However, they won’t have as much involvement as co-op boards. Owners can rent out or sell their homes whenever they wish. Condos can be a great option for people who don’t want to make a long-term financial investment. However, condos are more expensive than co-ops. Owners may be required to pay higher common charges depending upon the building’s amenities. In NYC, they are also easier to sell, according to Geller.

A co-op is a great option for those looking to invest in a home long-term. Owners get a share of the co-op, which means that all shareholders own the building and its units. The co-op board plays a significant role in deciding whether your apartment can be rented out or modified. The co-op boards play an important role in deciding who owns their buildings. This can make it difficult to get an apartment, even if you have the resources. NYC’s co-ops tend to be older than condos. Some, like the Upper West Side’s San Remo or Dakota, have celeb owners. This means that you can expect a more rigorous application process. Co-ops are often more common in NYC than condos and may be less expensive than condos.

An apartment building’s exterior. Plants are located in front of the building. One window has intricate molding.

Devon Banks

Townhouse: A three- to four-story townhouse is usually a building with multiple floors. It can be used as a single-family residence or as a multi-family dwelling. Townhouses can be narrower than detached houses, but they are more private than apartments. They often have rooftops or backyards, and provide more privacy than an apartment. Townhouses can be expensive, with many asking for more than $1million (or as high as $88 million depending on the house).

Fully detached home: Although these types of homes are rare in Manhattan, the Frick is an example. It is one of many detached houses that was a common sight in Manhattan during the 19th and 20th centuries. However, they are easy to find in neighborhoods such as Forest Hills and Ditmas Park. These homes are often larger and more spacious than attached townhouses and can have plenty of outdoor space.

Loft: It’s difficult to define a loft today in NYC, as there are many new buildings that recreate the feel of the originals. Lofts are often found in old industrial buildings or manufacturing buildings that were converted into residential areas. These lofts are known for their high ceilings and large windows. They also have wide open spaces and minimal interior walls. Many of the originals can be found in Williamsburg, Soho and Tribeca.

Do I rent or buy?

People who move to New York prefer renting to avoid the high cost of buying a house. In fact, New York City’s rental apartments account for around 63 percent. However, if you are planning to stay in NYC for a long time, renting may be more advantageous than buying.

You can also find neighborhoods like the East Village, West Harlem and Kew Gardens in the city. These are all areas where it might make sense to purchase, as you will break even in less time. There is no universal answer. Your financial situation and personal preferences will determine whether you rent out or buy.

What is the best time for you to buy?

The best time to purchase in the rest of the nation is towards the end of summer. However, the ideal time to buy in NYC is often the spring or fall. Although springtime is more competitive than other seasons, buyers also have more options because there are often many new developments, both condos and co-ops, that come onto the market in spring. Buyers are more likely to get better deals in the fall because there is often an excess of apartments on the marketplace, which leads to sellers offering lower prices. StreetEasy suggests that April through June are the best months to buy, followed by September and October.

Winter months are the worst time to purchase – December through February is the most accurate. During this period, there are fewer listings and buyers are less likely score discounts.

What amount of down payment do I need?

Buyers must consider the down payment when purchasing a home. StreetEasy says that the lower your down payment is, the more likely you are to have to pay higher interest rates in the future and incur additional costs. The down payment is also a factor in how likely you are to find an approved lender for your home loan.

The benchmark is a 20% down payment. Being able to reach that level will increase your chances of getting a loan and lower your interest rate. Geller states that it is possible to find homes with a lower down payment, especially in new condo buildings. You will need to take into account other factors such as private mortgage insurance that can be used to bail you out if you default.

Federal Housing Administration (FHA), loans can be used to pay as low as 3.5 percent. However, there aren’t many FHA-compliant properties in the city. Most are in the outer boroughs. This is something to think about.

Income-restricted apartments are also available in Housing Development Fund Corporation’s (HDFC), cooperative buildings around the city. These apartments work in a similar way to co-ops, except that the board decides who can live there. However, the apartments are reserved only for families and individuals with low or moderate incomes. According to city guidelines, the sales price of these units cannot exceed 165 percent from the area’s median income. Income restrictions vary depending on the type of apartment and the size family that lives in each unit. HDFCs can have higher down payments and all-cash agreements. Below is a listing of units currently available.

The city launched new programs in December 2017 to make homeownership more affordable. Open Door will finance condos and co-ops in the city for first-time buyers who earn between $69,000 and $112,000. Over the next eight years, 1,300 homes will be built through this program. The city offers assistance programs that provide up to $40,000 to help with closing costs or a down payment for those who earn up to 80 per cent of the median income in the area.

Do I need a broker? How about a lawyer?

Although you can purchase a home with no real estate agent, or broker, it is better to hire one due to the high competition in New York. A broker can help you negotiate concessions and get you the best deal possible. A broker can be very helpful when you are looking to buy in a NYC co-op building. They will have a greater understanding of the property’s requirements and be able give you an idea of the right candidate. A broker fee is not required for sales. This money is typically included in the sale price and divided between your broker and the seller.

NYC is a particularly important place to find a real estate attorney. New York City is different than other areas of the country. Buyers must create a contract to close a sale. This can be difficult if you don’t know the law. As they review the paperwork, your lawyer can help you to identify potential issues in your home or building, such as noise complaints, violations of building codes, and other concerns. Both the buyer and the seller of NYC property have legal representation. As a buyer, a lawyer will help you avoid being scammed by the seller. This type of work may cost you anywhere from $1,000 to $5,000.

Do I need to be pre-approved

An intersection in the city. People cross the street. On one side, there are apartments. A street sign reads Bedford Avenue.

Max Burkhalter

It’s a sure yes. Most brokers will require you to have a preapproval letter from your lender if you are working with them to find a house. A pre-approval letter from your lender will show sellers that you are serious about buying a home and increase your chances of selling.

Your lender will create a pre-approval letter based on your income, credit score and other factors. It is typically prepared in less than 30 minutes. Pre-approval is better than pre-qualified. The former only gives you a range of the amount you could qualify for a loan for, while the former provides an estimate that brokers and sellers will prefer. This will help you make sure that you are ready to purchase a home.

Geller says that strong financial records are what co-op board sellers are looking for. Your bank approval is the most important thing. This can be achieved by having your finances in order. If you can show that you have been working at the same place for several years, you will also be granted an advantage.

Can I enter a bidding battle?

Geller says bidding wars aren’t as common as they once were. While some high-end properties with trophy properties might still be subject to major bidding battles, most bidding wars are declining, especially in Manhattan.

There are many ways to win a bidding war if you find yourself in this situation. Knowing the area you are buying in is key to success. You can then offer more than the asking price, based on comparable sales. Flexibility regarding your closing date or your move-in date can help you get an edge. It’s a good idea to write a personalized, personal letter to the seller, especially if they are a long-term buyer or have invested in the property.

When can I move in?

It is dependent on each case. It can take up to 90 days from the time you sign the contract until you actually get possession of your home. However, this depends on many factors. The time it takes to buy a condo or a co-op can be affected by many factors, including the pre-approval of your lender and the services of your real estate lawyer. Co-ops can be secured in as little as 30 to 45 days. Board approvals can take up to 60 to 90 days for condos.

What should I expect from a closing?

A walkthrough of the property is usually done a few days before closing. You can take this time to make any concerns or observations. Your broker will provide you with a list.

Closings can take up to an hour because you, the buyer, must sign several bank documents. Geller states that you don’t need to bring any other items to closings, except for government-issued ID and a checkbook, if you intend to pay this way. All documents will have been reviewed by the seller by this time.

Your attorney and broker will usually accompany you to this closing. Before you sign any documents, make sure all documentation conforms to what you and the seller have agreed to.

Closings are often expensive. The amount of your down payment and the mortgage rate will affect how much you pay. However, there will be legal fees and mortgage fees as well as a move-in fee. An average price is difficult to estimate because it depends on the cost and whether the apartment is a co-op, condo or single family home. Expect to spend thousands.

Once that’s done, it’s time to get on with the work of getting settled in your new home.