It has been a busy home-shopping year in New York City. According to StreetEasy economist Nancy Wu, with the sheer number of homes on the market, low mortgage rates, and stable prices, many decided that 2021 was the year to buy. But even in this ultra-pricey city, there are quite a few areas with a selection of affordable abodes. Here we explore the best NYC neighborhoods for first-time home buyers — just in time for the fall home-buying season.
Sheepshead Bay & Forest Hills Homes Under $400K on StreetEasy Article continues below
Where to Buy in NYC
StreetEasy has uncovered the 10 NYC neighborhoods with the most homes accessible to first-time buyers. Topping the list are Sheepshead Bay and Forest Hills, two of the several Brooklyn and Queens neighborhoods on our list. Our analysis even found a couple pockets in Manhattan that are relatively affordable for first-time buyers.
We sought homes that would be affordable to New Yorkers ages 25 to 44 who earn the city’s median annual income of $70,406. (That’s per census data; see “How We Did It” below for more on our methodology.) According to a recent StreetEasy survey, millennials make up the majority of first-time buyers in NYC. The typical new buyer is 37 years old. To find the neighborhoods with the most options for these buyers, we looked at the absolute number of affordable listings in a given area, out of all sale listings between June and August 2021.
Our definition of “affordable” factors in a 20% down payment, as well as the costs of maintenance, taxes, and common charges. We arrived at a maximum monthly outlay of $2,346. So how much will that get you? The median asking price of all the homes we considered affordable in these 10 neighborhoods is $352,780.
Assuming a median-earning buyer saved 10% of their gross income every year, it would take them about 10 years to save up the standard 20% down payment on such a home. That may sound like a long time! But saving for a down payment on a $949,000 home, which is the median price across all of NYC, would take a lot longer — 27 years.
Sheepshead Bay Is Affordable for First-Time Home Buyers
Sheepshead Bay, Brooklyn, known for its beaches and great seafood options, came out on top of our list. It had 330 apartments on the market in between June and August of this year that fell within our affordable monthly spending range. Bordered by Brighton Beach and Gerritsen Beach, and close to other key Brooklyn areas, Sheepshead Bay has many different housing options for buyers. The variety, from new developments to historic bungalows, makes it attractive for a wide range of budgets.
Two other Brooklyn neighborhoods also qualified as affordable for average first-time buyers: Bay Ridge and Midwood. These areas all require around an hour on the subway to reach Midtown. There’s some good news for buyers who do not mind living farther out, though. The median asking price in these Brooklyn neighborhoods is significantly lower than the borough-wide median of $929,000 (as of July 2021).
The Upper East Side and Flushing Are Now More Affordable, Too
Eight of the 10 neighborhoods on our list are repeats from the last time we pulled this data, in 2019. Only two new neighborhoods made our list this year: the Upper East Side and Flushing. According to Wu, these areas made their way onto the list because they both gained a lot more inventory in 2021. And with more inventory comes more affordable homes to suit the budgets of first-time home buyers.
Bay Ridge & Midwood Homes Under $400K on StreetEasy Article continues below
Affordable Options in Manhattan? They Do Exist
Manhattan may not be the top place first-time home shoppers on a budget think about when searching for a place. Yet Midtown East and the Upper East Side can offer surprising value, ranking at numbers 5 and 6 on our list.
These neighborhoods are still pricey, of course. Only 5% of Upper East Side homes qualified as affordable in our analysis. And in Midtown East, 9% of homes qualified. Yet both of these areas have options for budget-minded buyers, in large part because of their size. They are two of the largest neighborhoods in New York City, with a dense concentration of high-rise buildings. That translates into lots of listings — more than 3,550 in July 2021. A small share of their overall stock still means 322 possible homes for average-earning shoppers.
One caveat for buyers eyeing these Manhattan neighborhoods to be aware of. Many of the lower-priced units in these areas are co-ops. As such, they often require buyers to have cash reserves or assets significantly larger than the down payment alone.
Working with a partner agent to navigate the complicated buying process process is extremely helpful. StreetEasy can match you with a top-performing agent in our StreetEasy Experts program. These agents have the skills, knowledge, and local expertise you need to successfully buy a home a home in NYC.
Midtown East & Upper East Side Homes Under $400K on StreetEasy Article continues below
Buyers: Don’t Be Discouraged or Afraid to Negotiate
As always, “affordability” in NYC is relative. There are 10 distinct areas on this list of the best NYC neighborhoods for first-time buyers. While nearly 60% of listings in some of them are affordable to an average first-time buyer, in others, the share of attainable listings is only 5%.
The New York City market is heating up. There is more competition between buyers than we’ve seen in the past several years. But the good news is that buyers are looking in a market with a ton of options available to them. Low mortgage rates and high inventory offer great opportunity to score a good deal.
Even neighborhoods that did not make this list can offer great value. In the second quarter of 2021, more than half of listings on StreetEasy closed below the asking price. So negotiation is key.
Flushing & Jackson Heights Homes Under $400K on StreetEasy Article continues below
When Buying, Think Long Term
A question many NYC renters ask themselves is, Should I buy? The fact that there are affordable homes does not mean buying is right for everyone.
The upfront costs of purchasing a home in New York City are high. It takes six to eight years of living in a place for owning to make more financial sense than renting. Most buyers in NYC do stay in their homes long-term: 71 percent of homeowners still live in the first place they ever purchased. And homeowners stay in their purchased homes for a median of 18 years.
If you are looking to buy, consider whether the home you can afford will be roomy enough to accommodate your future plans and desires. And think about whether you’ll be happy in the neighborhood for the better part of a decade.
Whether or not to buy a home is always a personal decision, which requires a lot of research and careful planning. But right now, buyers in New York definitely have the market dynamics working in their favor. These 10 neighborhoods provide some context as to where there are plenty of homes within reach on a median first-time buyer’s income.
Rego Park & Riverdale Homes Under $400K on StreetEasy Article continues below
How We Did It
We analyzed the number of homes affordable to New Yorkers ages 25 to 44 who make the median gross household income of $70,406, as found by the U.S. Census’s 2017 American Community Survey. We assumed a mortage rate of 3%, the higher range of a 30-year-fixed mortgage in 2021. This rate is a conservative estimate. It’s likely where mortgage rates will head to toward the end of 2021 and beginning of 2022, as the economy continues to recover from the COVID-19 pandemic. We used taxes and maintenance costs from StreetEasy listings data. A home fell in the affordable range when its monthly total payment did not exceed 40% of the monthly gross household income. Monthly total payment includes the maintenance or common charges, taxes, and mortgage payment. Monthly mortgage payment is calculated as the remainder of the price of the home after a 20% down payment, amortized over a term of 30 years at the monthly mortgage rate.
