How to Buy An Apartment In New York City

New York City is home to almost 8.5 million people. It’s a popular place to live, but it’s also notoriously expensive. Home prices in Manhattan, for example, average about $1,000,000. The average income, however, is just over $50,000 annually. That’s a huge discrepancy in housing costs versus what people are actually earning. Factor in a 20% downpayment, which would be around $200,000 for a million-dollar home, and you’re probably wondering how most people afford to live in NYC at all.

Buying an apartment in New York City can seem daunting… and for good reason. There’s usually plenty of apartments on the market, but most of them are largely unaffordable for the average person. Even if you make an income that’s well about the average, it’s still an overwhelming task house-hunting and making a successful home purchase in the Big Apple. So, what factors should you consider when trying to buy an apartment in NYC?

What Type of Home Should You Choose?

When embarking on your New York City apartment hunting adventure, the first step is to determine exactly what you’re looking for. Not every type of home is going to fit the bill or be an option for you. You’re likely to find that the vast majority of homes on the market are apartments. But not all apartments fall under the same category. Some are co-ops, some are condos, then, of course, there are other types of housing options too. Have a good idea about what type of home is going to fit your lifestyle and suit your needs.

Unlike most other cities across the United States, co-ops are extremely popular in New York City. If you start looking at apartments for sale, you’ll probably see that a huge number of them are co-ops. This might make you think that a co-op is the absolute way to go, but before you start looking seriously, there are some things you need to consider.

  1. Co-ops can have lower monthly payments than other housing options, but most of them require a pretty hefty downpayment, sometimes up to 40%. 
  2. You may need to have liquid assets equivalent to the sales price of the co-op to be considered.
  3. The application process can be rigorous.
  4. You won’t actually own any real property, only a share in the co-op.

Condos are also fairly plentiful in New York City, and while you will have to deal with a detailed application process and the board, it won’t be as intimate as dealing with a co-op board. When you own a condo, you do own real property, and you also own a share in the building’s amenities and facilities, if there are any. However, condos are typically more expensive than co-ops, and they can sell very, very quickly.

Townhouses are much more common than fully detached homes, but depending on one where you buy, you can expect to pay a pretty penny for a townhome in New York City. You can certainly expect to spend more than $1,000,000 on a townhome in the city, particularly in Manhattan, where they frequently reach the 8-figure mark. On the plus side, if you can afford a townhouse, they’re much more private and usually have a backyard. The same goes for fully detached houses, but these are rare and very expensive. 

You also need to consider where you want to live. New York City has an abundance of neighborhoods, all of them with their own personalities, benefits, and downfalls. But most importantly, the neighborhood you choose could have drastic effects on how much homes cost. If you’re looking in NoHo, Hudson Yards, or Tribeca, the median sales price is over $3,000,000. If you can’t afford to shell out for the most exclusive Manhattan neighborhoods but still want to be in Manhattan itself, East Village, Union Square, or the Lower East Side might be more realistic options. Of course, other areas, such as Brooklyn and Queens, have plenty of fantastic neighborhoods to choose from as well. 

When Should You Buy an Apartment in New York City?

Generally speaking, spring and fall are the best times to purchase an NYC home. In spring, most new developments start to come on the market. Spring is more competitive than other times of the year, giving buyers a larger selection of homes to peruse. Fall time often sees a surplus of homes for sale, which means a buyer is more likely to score a discount. Whatever you do, try to avoid buying in the winter months, as generally speaking, there are fewer listings, so you’re not as likely to get a good deal.

What About a Down Payment? 

The down payment will probably be one of the biggest qualms you will have when considering making an NYC apartment purchase. Namely, because they’re often extremely pricey. Lower down payments equal higher interest rates, so you want to put down as much as you can afford. Generally speaking, it’s best to aim at having a 20% downpayment or as close to that benchmark as you can get. If your downpayment is much smaller than 20%, you might struggle to find a lender.

If you’re fortunate, you can try to secure an FHA loan, which could allow you to put down as little as 3% on a home. That being said, FHA loans require a much stricter inspection and approval process, which will seriously limit the number of home options that you can purchase in the city. 

There are also programs being made readily available in NYC to help more buyers be able to afford homes. For example, if you earn between $69,000 and $112,000 annually, condos and co-ops are being constructed specifically for first-time homebuyers who fall within this income range. If you do a little research, you’re likely to find programs for which you might qualify that could help you make a home purchase.

You also should make sure that you get pre-approved before you start seriously looking at apartments. When working with a real estate agent or a broker, they will usually require you to have a pre-approval letter. Pre-approvals also help to indicate to sellers that you’re serious about making a purchase. What’s more, they help to expedite the process and allow you to move forward with putting in an offer quickly if you find an apartment you like.

How To Deal With a Bidding War

If a bidding war is going to happen, you can do a few things to help give yourself the upper hand. The first thing you can try is to avoid getting into a bidding war in the first place! Whether or not you get into a bidding war will likely depend largely on the time of year you are buying, the area, and the property. If you’re buying during a competitive time and in a competitive neighborhood without much else on the market, you might find yourself having to outbid another interested buyer. Doing a thorough analysis of comps in the area can help you know how much you should offer to avoid getting into a bidding war in the first place. Analyzing comparable homes properly will give you a good idea of the going sales rate. Having some flexibility with the closing date and when you want to move in can also help to persuade a seller. 

What To Expect When It’s Time To Close The Sale

If you made it to closing day, congratulations! You’ve successfully managed to survive the process of purchasing an apartment in New York City. But what exactly should you expect when the closing day rolls around? 

Firstly, pay attention when you do your walkthrough. This is likely to happen just a few days before your closing date and it’s your time to note anything that seems out of place or that you think should have been addressed. Make notes and, if you have a realtor, bring them with you to help you out during your walkthrough. 

When the closing day finally comes, prepare to spend some time signing documents, usually a few hours. Bring a government-issued photo ID and pay close attention to every detail before you sign. Your broker, real estate agent, and possibly others from the brokerage should be present, and if you have an attorney you should bring them along too. 

You should also be prepared to pay some fees upfront at closing. You might need to pay mortgage fees, and it’s at closing that you will be required to fork over your down payment funds. But the good news is, once you walk away from closing, you’ll own your very own NYC apartment!