I have a couple of specific questions below, but for context I'm 25 years old and looking to buy a 1 bedroom apartment in NYC. I have about 100k in savings and I'm looking at apartments in the 400k range (80% LTV + closing costs and a little cushion). I have two questions for the group:
1) As an investment, what are people's thoughts who are more in tune with the NYC real estate market? How much have prices dropped since last March? When will they rebound? Have different types of properties and different neighborhoods been impacted differently? Where is the best value?
2) This is really a question for people who have gone through the process of buying in NYC. What do you wish that someone had told you? What are the most important things to look for in an coop? Would people mind sharing a little about their personal experience? Broker, financing recommendations, things to watch out for, etc.?
I'm sure there are other forums on this, but didn't see any recent ones. Appreciate the insights!
I've taken a look several times, and ultimately decided against it. My own opinion of the NYC market is that it's only worth buying if you plan on staying here for the long term. HOA and property tax is big chunk relative to the rent of most studios or 1 BRs. I don't know what your plans are for the future, but maybe this is you. For it to really pay off and be advantageous to buy is if you plan on staying here for / or keeping the mortgage for ~10 or 20 years.
On the lower end, I wouldn't say prices have dropped very much. There is always demand... As it typically goes, it's always the higher end and larger properties that draw the headlines that you are seeing about "NYC real estate dropping or rents dropping".
The key is to make sure that interest + property tax + HOA + upkeep / repairs - savings on taxes < rent
Interest is the key. You control interest by paying a ton on the down payment. So if you have a ton of cash and are willing to put the required time to maintain the property, then it could make sense.
I think I'm actually going to try to model this out. Obviously there are lots of costs associated with owning: taxes, HOA fees, mortgage payments, illiquidity / opportunity cost, but I'm currently paying about 30k / year in rent that I will never see again and I just can't imagine that in the long run (even if I stay in NYC for a min of 5 more years) it makes sense to keep renting. Going to have to run the numbers.
Will you be okay sharing your assessment/model? I am on the over side of the pond in the UK, roughly have the same amount saved up and thinking about buying also. It's weird because everyone around me is renting and I find nobody has any desire to buy until they move in with their girl and a kid so I may just wait until then also.
So I ended up buying and I'm happy with the decision. These were my economics: one bedroom in manhattan bought before prices rebounded at 400k (assessment was 450k and original listing before COVID was 600k, so I think I got a pretty great price for a true one bed). I put 80k down (20%) and spent about 5-7k in closing costs. It's a coop, so I needed to have a year of reserves in the bank so this was close to maxing out my budget at the time. My HOA fees are ~$1,400 / month and my mortgage is another ~$1,400, so my monthly costs are $2,800. I was paying $2,300 before to live in a studio and I'd say my new place is a significant step up in terms of additional square footage and storage space. I accumulate about $1,000 of equity per month given part of my mortgage is going to interest. Most importantly, rental rates have been rising. I have a friend who was paying $2,500 per month and her rent was increased last month to $3,500. The market for a one bedroom feels in the $3,000-$4,000 range. Anyways, i'm 26 now and live alone so this feels like a good starter home, but in 5-7 years I'll plan to sell and look to buy a 2 bedroom or move the suburbs. I'm probably a tri-state lifer. By that point, I think I'll be able to cash about about ~200k in equity value to put towards a new down payment for a place in the $1mm - $2mm range. Total comp this year was $350k for reference.
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