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A blog from CityRealty (Links below will take you to the 6sqft site)


It’s no secret that buying into the New York City market is more difficult than buying into most housing markets in North America. While cost is an obvious obstacle, what many aspiring owners don’t realize is that the actual cost of purchasing a unit is only the first barrier to ownership. High closing cost, higher-than-average co-op and condo fees (sometimes asked for in Escrow before closing), down payments exceeding the standard 15 to 20% threshold, and in co-ops, myriad arbitrary guidelines designed to keep desirable tenants in and undesirable tenants out all make the process of purchasing a first home more costly and stressful than in most other cities. Fortunately, a combination of strategy and good fortune can help first-time buyers dodge at least some of these obstacles.

Troubleshooting the High Cost of Housing

According to CityRealty data, for the third quarter of 2020 the median sales price paid for a condo in Manhattan was $1.68 million ($1,491/ft2) and the median price of a co-op was $772,500. With the exception of the Bay Area, where prices rival, and in some cases, exceed those in New York City, the city generally faces little competition when it comes to high housing costs. While this does make it a difficult market for first-time buyers, there are at least a few ways to troubleshoot the cost and hassle of purchasing your first unit.
The most obvious strategy is to look for a condo unit in a yet-to-be-gentrified or up-and-coming neighborhood (e.g., Prospect Lefferts Gardens, Brooklyn or Sunnyside, Queens). Neither neighborhood is Soho, but remember—Soho itself was once considered an undesirable neighborhood and the same held true for the entire East Village and Lower East Side. Condo units generally have much fewer approval obstacles to face compared to compass and typically require a smaller downpayment. Bear in mind that any equity you sink into a unit in a gentrifying unit can usually be fully recovered if you decide to move, so at the very least, it is far more strategic than renting and may prove to be a great investment if you hold long enough to see the neighborhood undergo a major shift in value.

Any equity you sink into a unit in an up-and-coming neighborhood can usually be fully recovered if you decide to move.

Another potential strategy—if you qualify based on income and household size—is to consider purchasing an HDFC unit. In some instances, these units can provide an opportunity to buy in Manhattan or a highly active real estate market in Brooklyn at prices that are well below market value. If you do purchase an HDFC unit, however, your return on investment over time will be considerably lower, so in general, this solution is only recommended if you are looking to purchase with the intent of staying put over time. Read more about HDFC purchases here.
While there is no question that younger buyers do face especially steep challenges, it is possible for buyers under 30 and even under 25 to purchase units in New York City. Back in 2013, Polly Mosendz—at the time, she was 22-year-old and a recent New School graduate—published an article in the New York Observer about her purchase of a Greenwich Village apartment. According to the article, Mosendz had managed to purchase an apartment for $250,000. While the article was presumably written to offer evidence to the city’s youngest potential buyers that it is possible to buy before one starts to gray around the edges, Mosendz’s story was unusual enough to attract considerable attention. (Gawker even published a follow-up article, alleging that Mosendz hadn’t really purchased the apartment but relied on huge family gifts and a co-signer). So, is it possible for the very young to buy in New York City?

Down payments, Closing Costs, and Other Surprises

In many U.S. cities, even after the 2008 recession, housing programs continued to help first-time buyers with affordable low-money-down mortgages. In New York City, however, co-ops and condos typically will not work with buyers who are relying on first-time housing program mortgages. Indeed, many co-ops, even affordable HFDC co-ops, expect buyers to bring more than 20% to the deal (sometimes 80% to 100%), so putting 3% to 5% down is simply not an option.
Beyond the high down payment typically needed to buy into the local market, potential buyers also need to be prepared for higher than average closing costs and may even be hit with other surprises. Some co-ops, for example, ask new buyers to put up to three years of building fees in escrow. Notably, when buildings ask buyers to pay their fees upfront, the money is sitting in an escrow account but not being used to cover current fees. Indeed, it is just there to ensure that co-op that they will not be left high and dry if the new tenant stops paying their co-op fees at any time. However, where there is a will, there is a way, and at least some New Yorkers are finding innovative ways to dodge the down payment and fee obstacles that so often come with most co-op and condo purchases.

A growing number of New Yorkers are teaming up with siblings and even friends to co-purchase entire homes.

While not everyone’s dream scenario, a growing number of New Yorkers are teaming up with siblings and even friends to co-purchase entire homes in developing neighborhoods where prices for a share of a brownstone can often be much lower than purchasing a co-op or condo unit. This strategy also means that new buyers need only negotiate with the seller and lender—not an entire co-op or condo board. While any home purchase will come with additional responsibilities down the line—if the roof caves in, it is your problem, not your co-op board’s problem—for first-time buyers, purchasing an entire home can be a much easier way to enter the city’s difficult housing market. As an added bonus you’ll likely end up with something few New Yorkers own—a backyard.

Challenges Facing Young Buyers

Most adults love highly motivated and independent young adults—that is, until they attempt to purchase a co-op or condo unit in their building. Despite the fact that some young people have the means to do so, potential owners under 25 and even potential owners under 30 face especially steep hurdles on the real estate market.
First, even if one has a large down payment (e.g., from a recent inheritance) since one’s credit rating is based in part on the age of one’s accounts, there is simply no way for someone under 30 to have a perfect credit score. This invariably leads to higher interest rates and puts one into a higher risk category, even if they have an outstanding but short credit history. Second, there is the even larger problem of persuading a co-op board that one is a potentially desirable tenant.

The younger you are when you go on the housing market, the more likely you are to be asked to put down more money upfront.

The long and short of it is that the younger you are when you go on the housing market, the more likely you are to be asked to put down more money upfront and to offer more assurances that you won’t stop paying your fees down the line (e.g., to put one or more years of fees in an escrow account). After all, even if you can afford a high down payment and prove that you can cover the monthly mortgage payments and building fees, co-op boards will still have a legitimate reason to assume that your income may not be as stable as someone who has been working for decades.

So, what are very young buyers to do? It might not feel entirely dignified, but if you need a co-signer to purchase your first unit, simply bite the bullet. In the end, the equity you gain by buying not renting in your twenties will put you in an ideal position to purchase a second unit by the time you’re in your early to mid-thirties, which is when most people are only beginning to think about purchasing their first home.

From the listing:
Outdoor space! Open views in this fabulous studio, convertible to a one-bedroom with floor to ceiling windows, marble bath, washer dryer. It faces west and north and has great potential.

The washer/dryer is in the apartment as an added bonus. The building has a Health Club, Swimming Pool, Community Room, Roof Deck, bike room, garage, storage. Pets are welcome!

From the listing:
Oversized one bedroom in Triple Mint condition with full-time doorman. The just completed renovation features, oversized apartment with designer upgrades and Empire State views! Apartment 8E has an entirely new kitchen including designer soft-close cabinets to ceiling, calacutta quartz slab countertops & backsplash. All new stainless-steel appliances, instant hot & cold filtered water system and new modern fixtures & lighting.

161-West-133rd Street (Corcoran)
From the listing:
Enjoy Condo living in this pleasant 708SF Duplex with garden views! The main floor features a charming common living space and a svelte kitchen, with stainless steel appliances and modern cabinetry set against lovely cherry flooring. Recessed lighting compliments the space after the sun recedes in the evening from the windows in each room.

From the listing:
Very spacious studio with dining alcove and grande WIC few blocks from Central Park in a 24 hours doorman Condominium Building. Hard wood floor, high ceilings. Bright and quiet high floor, South exposure.This unit will keep the unobstructed views due to the fact that the buildings on the streets below are landmarked townhouses.

From the listing:
Move right into this modern and airy 1-bedroom condominium that epitomizes luxury NYC living in a quintessentially Gotham-esque neighborhood. The entry foyer and hallway open up to the living room with majestic oversized windows that echo the 11-foot ceilings in this one and only 1-bedroom unit in the building.

How to find a new york city apartment Savoy West, #2B (Compass)
From the listing:
553-555 Lenox Avenue: -Condo -Pet-friendly -Investor-friendly -Amenities: landscaped roof deck, a residents' lounge, fitness center, laundry, storage and bike room. This pristine one-bedroom, one-bathroom condominium features premium finishes and the perfect West Harlem location. A well-planned layout maximizes space while taking advantage of western light. The long entry hall features a roomy closet and opens to an airy living room with a convenient dining nook. Beautiful crown moldings accent nine-foot-tall ceilings.

How to find a NYC apartment (Compass)
From the listing:
Bright, open, airy, renovated, and luxurious! Entering 4P, you feel like you are coming into a house rather than another cookie-cutter apartment. High 9' ceilings, big windows that let light pour inside, and a floor plan that allows for easy flow between the large living area, dining area, and kitchen. The second bedroom is perfect for a child's bedroom or a home office in our work-from-home world! The main king-sized bedroom features a large closet and, at 16' long, can easily accommodate either a reading nook or another desk.

From the listing:
This two bedroom/two bathroom condo is a calm oasis in the premiere development of Edgecombe Parc. The apartment features abundant sunlight, red oak hardwood floors, and double glazed windows. The state-of-the-art kitchen is styled in contemporary design with beautiful granite countertops, custom redwood cabinets, and a suite of stainless steel GE Profile Series appliances. The pristine bathrooms both feature soaking tubs, white ceramic tile floors, a black Wenge wood vanity, white Kohler basin, and TOTO toilet.

From the listing:
Brand New to market spacious and sun-splashed studio apartment on the 45th floor of the Galleria Condominium with wonderful open cityscape views. The apartment features a marble bathroom, updated kitchen, and beautiful hardwood floors. Amenities at this luxurious, full-service condominium include a garage, storage, a party room, housekeeping, and valet service, and an amazing sky lounge with 360-degree views of Manhattan and beyond

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Contributing Writer Cait Etherington Cait Etherington has over twenty years of experience working as a journalist and communications consultant. Her articles and reviews have been published in newspapers and magazines across the United States and internationally. An experienced financial writer, Cait is committed to exposing the human side of stories about contemporary business, banking and workplace relations. She also enjoys writing about trends, lifestyles and real estate in New York City where she lives with her family in a cozy apartment on the twentieth floor of a Manhattan high rise.