Buying an Apartment in NYC

First time buyer here currently looking at studio condo apartments in NYC in the <$700K range. Wondering if anyone here has perspectives on current state of the Manhattan real estate market and expected trends over the next 12-18 months and if waiting makes sense to buy vs. pulling the trigger now. I know the market is softening up and prices are correcting, and overall it's looking more like a buyer's market but just wondering if people have any thoughts here

Comments (39)

Aug 30, 2018

That market isn't moving much. The ultra high end luxury market is way oversupplied and is absolutely a buyer's market, and that is exerting downward pressure on other luxury units (think TriBeCa instead of 57th St), but when I was last looking at this (3-4 months ago) it hadn't managed to penetrate below the $1-3mm range. Those apartments actually saw an uptick in velocity.

For that price you're probably restricted to being way east in the 50's and 60's and FiDi. My advice is to wait. You're buying a studio, so this isn't a long term buy (I assume). You're going to want to move into a bigger space eventually, whether that's better financial circumstances or needing more space for a family. I doubt you're paying much less than 4,000/mo once you factor in common charges, taxes, and your mortgage. Why not go live in some sick one bedroom, basically anywhere you want, for that? With the way the luxury rental market is giving out concessions, you can probably live in a better, bigger unit in a better location, in a newer building, for less money. No, you're not building home equity or anything... but that isn't much of a sunk cost. Take 300/mo that you would have paid and invest it somewhere else, it'll do better for you.

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Aug 31, 2018

Thanks - I'd be looking in midtown east (Murray Hill, Kips Bay, etc.). Do you think my situation should be a play for the next 12-24 months then? I'm looking at studios to potentially hold over a long term vs. buying for 5 years then flipping to a 1/2-BR. My line of reasoning is that interest rates are ticking up and it's tough to predict what will happen over the next 2 years so might make sense to lock in today's rate if I can negotiate a good bargain on a studio that I like. First time looking at the RE market in any sort of serious fashion so please correct me if you think I'm talking out of my ass.

Aug 31, 2018

As @Ozymandia mentioned people have a misconception of the affordable condo market in NYC (call it <$1.5mm). The headlines are full of the stories about the luxury market suffering, but all average/normal buyers want to buy something they can afford including myself. The affordable units in the city are in very healthy demand and move quickly so I wouldn't go into it expecting a good deal by any means. Your best bet of finding something at that price point is a coop, but god speed with that and make sure you're happy living with ancient overlords that want to control everything you do in your own home.

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Aug 31, 2018
Ozymandia:

Take 300/mo that you would have paid and invest it somewhere else, it'll do better for you.

That's an interesting question, would renting and investing the potential downpayment into something else produce the same or a better result. My prior would be a "no", even if you account for the scrape (common charges, taxes etc) - the non-MtM leverage that a housing market gives you is unique.

Sep 3, 2018

Well it's just leveraged. If it's a bad housing market or bought poorly that leverage works against you.

At the price point being discussed I'd likely say renting is smarter.

I also think it's tough to predict that someone would stay in nyc that long to then buying into a smart decision. The large cities do not cash flow th same way something in Texas does. Also 5-6% realtor fee takes up about 2 years of expected appreciation.

Array
Aug 30, 2018

Few things worth mentioning:

  • If you're considering new development, sponsors have been open to negotiating on sub-$1mm units recently (~10% off plus most/all closing costs).
  • It's a popular talking point in the media, but I would argue the sub-$1mm resale market is not softening, and that appropriately-priced sellers still have the advantage.
  • The argument that purchase prices should adjust accordingly when interest rates go up falls on deaf ears in the resi world. Just a heads up, as this takes some people by surprise.
  • If you're considering it as an investment property: there is a glut of rental units hitting the market in the next 12 months, especially studios/1BRs. Leasing these up is already a pain for large firms, so best to avoid competing with that supply and happily make it your primary residence or continue to rent.
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Aug 31, 2018

Thank you for the response. Few thoughts:
- It would be my primary residence with potential flexibility to hold longer term as an investment property
- How do you see the market moving? i.e. Do you think there's market tailwinds coming to play over the next year or two that makes waiting more attractive?
- Can you explain the price and interest rate point? Do you mean there's a lag between the movements or that it's tough to find any sort of correlation?

Aug 31, 2018

To your last point he means the sellers don't care about the interest rates going up - they are still going to try and sell them at the same price, financing the purchase of the condo is not their problem and there are plenty of cash buyers (think foreign investors).

Aug 30, 2018

Just rent, you might not even be in New York 3-5 years later

Aug 31, 2018

Nah, probably a long term play. Born and raised in Manhattan and most likely will stay here for the foreseeable future.

Aug 31, 2018

I would never buy real estate when the economy is at peak like it is now.

Aug 31, 2018

murray hill
525k
600 sqft
https://streeteasy.com/building/310-lexington-aven...
price seems high with that $1,387 monthly maintanance.

just google it...you're welcome

Aug 31, 2018

This is a co-op. Also, could be wrong but believe monthly maintenance is a fixed cost independent of listing price.

Aug 31, 2018

yes, its a fixed cost...so the listing price should be lower to compensate.
i suspect this apt would sell at 460k

just google it...you're welcome

Aug 31, 2018

Apartments = rent from a landlord; condos / co-ops / town-homes etc. = own.

Sep 4, 2018

What is everyone's thoughts on spending 4K in rent on a one bedroom or even 3000k a month? Do you feel like you're throwing money down the train rather than purchasing a condo/co-op with all that money?

What are the pros and cons? I mean ideally, everyone would like a place to eventually own. It's tough to just spend that much money a month when you can build equity in a unit in a hot market like manhattan in the long term.

Sep 4, 2018

I'm always surprised when my friends pay $4200 for a 1BR on the UES. Not judging, as they can easily afford it (and I'm sure there are plenty of monkeys here who do the same), but usually they're not getting a lot for the money. I think of it as:

Value = (Location + Size + Amenities) / Rent

By my logic, it's okay to pay $4200 if you have a good location (easy commute to office or favorite going-out spots); good use of square footage; and maybe a decent gym, dishwasher, or the holy grail in NYC: in-unit washer/dryer (that vents out--an often-overlooked detail). Many of my friends' apartments don't score highly on those numerator inputs. If you're not going to have a subway outside your place and a gym, why pay that much? No need to answer that, just my $0.02.

Sep 4, 2018

Thanks for your two cents. Definitely agree.

But wouldn't the people on this forum or yourself be better off paying 4200 a month OWNING an apartment with all in costs including all the amenities and location you mentioned?

Why rent when you can find a comparable unit for maybe only 200 dollars more a month but you're building equity. Maybe if you don't plan on staying long? More transient?

Sep 4, 2018

What is everyone's thoughts on spending 4K in rent on a one bedroom or even 3000k a month? Do you feel like you're throwing money down the train rather than purchasing a condo/co-op with all that money?

What are the pros and cons? I mean ideally, everyone would like a place to eventually own. It's tough to just spend that much money a month when you can build equity in a unit in a hot market like manhattan in the long term.

Nov 5, 2018
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