When buying a home in NYC for $1M, it is important to know just how much your money will get you. Whether you are buying a condo or a co-op, the location you are looking to buy in will determine the size and quality of your new home. New York City’s residential housing market is very busy, but there are still a lot of desirable homes to purchase. Here is some advice to help.
- know what you can buy for $1 million
- know the difference between borrower and cash buyer
- your financial homework
- know the specifics of location
- believe everything you read about the real estate market in NYC
- forget to seek professional advice
- forget to consider if you need to sell in order to buy
- forget about the true costs of homeownership in NYC
Firstly, establish your own needs and motivation for making a $1M property purchase in NYC. $1M could currently buy you, for instance: a one bedroom apartment in a new construction condominium in downtown Manhattan that could be an investment property, or a two bedroom co-op apartment above West 96th Street which would likely have to be a primary residence for either yourself or a family member. Are you looking for something to live in or invest in?
It is a very busy time in the NYC residential market. The last few years have seen continued low bank interest rates which have induced people to want to buy. There has also, however, been a continued lack of property inventory (due in part to a reduction in new construction stretching back several years). As a result desirable properties in the $1M and below range (considered the “lower” end of the price range in NYC) are attracting multiple offers and fetching above “asking price”. If you are in the enviable position of not needing a loan you will go to the front of any line. If you are borrowing but are able to put down a larger than required deposit this will also be in your favor.
Any apartment in NYC that comes in at $1M or above (you should add your closing costs to the cost of the apartment to come up with that $1M figure) is subject to an additional Mansion Tax of 1% due at closing. This should figure in any financial calculation you make before signing a contract.
Once you know what you might want to buy (for instance Condo or Co-op, one bedroom or two) the next step is to know where you want to buy it. There is no “average price per square foot” for Manhattan overall, although some aggregate figures can be arrived at. Prices in areas such as the West Village, Central Park West or Soho (considered the most expensive in the city) can be upwards of $1200 per square foot currently, whereas going above 96th Street on either the East or West side of Manhattan can bring you below $800 per square foot. Looking in the outer boroughs will bring your price per square foot down even lower.
Many people from professionals to laymen have an opinion on New York City real estate. The truth is that the market in NYC is very particular and has remained consistent when compared to many other US cities. It remains a great place to make a real estate investment. The reasons for this are many and varied and will become clear once you embark on your search.
Do not attempt to go at this alone. Whether or not you have purchased in NYC previously it is always a good idea to work with a real estate professional. Their support and expertise in a fast-paced industry can mean the difference between winning or losing the keys to your dream home and their help comes at no cost to you.
If your $1M budget is tied up in your current home and you need to sell before you can buy, it is important to have that cash in hand before embarking on your NYC search. There can be last-minute glitches in your sale that could prevent your purchase. You should also have an idea of where you will be living in the interim if your new home is not yet ready to move into once the old one has been sold. Preparedness is everything at a time in the market when desirable properties are moving very fast.
Given the way savings are garnering interest in banks currently it is easy to see why so many from around the world are investing in property in a financially secure city such as NYC. It is a big decision, make no mistake but once you’ve had a look around, found a property you like and asked the right questions of your buyer’s agent, it’s time to jump.
Don’t go in blind. If you are borrowing, understand the true costs to you over the life of the mortgage as well as the benefits of borrowing (this is something your loan officer should be able to make absolutely clear to you). In addition, your real estate attorney and buyer’s agent should spell out maintenance costs, taxes and give you information on the financial health of the building you are buying into.
There is a reason why the real estate market in NYC is so competitive for the buyer. Historically, NYC has held it’s value and has weathered many a financial crisis to come back even stronger. $1 million can still buy you a great investment property, first or second (or third) home in NYC, although a bargain may be hard to find these days. Best advice: work with an experienced professional every step of the way and in all areas of your purchase (search, loan and legal). Happy hunting!