This 1-bedroom co-op is asking $330K with a monthly maintenance of $873, making it a quintessential NYC starter home. It’s located in Forest Hills, Queens, the top NYC neighborhood for first-time home buyers according to a recent StreetEasy report. See the listing here.

There’s truth in the old adage that New Yorkers operate on a later schedule than residents of other places. We get to work later, eat dinner later, get married later, and have kids later. When it comes to real estate, we often buy our starter homes later, too — if we buy them at all.

In New York City as in most places, a starter home is an entry-level property that first-time buyers can purchase with modest savings. Usually a stater home is relatively small, and meant to be occupied for only a few years, until the owners trade up for a larger, long-term place. Price is a key factor, too: CNBC cites the cost of a typical American starter home as between $150,000 and $250,000.

Starter Homes in New York City Are Different

“It’s a whole different story here,” says Daija Arias, a New York City-based broker with Berkshire Hathaway Home Services. Finding a home in New York City for around $250,000 is not impossible — there are some surprisingly nice options in the Bronx. But in a city where the median asking price is $999,000, that amount won’t get much, even in Inwood or in Upper Manhattan, where Arias specializes. 

According to Ben Willig, director of sales at Anchor Associates Group, there are two categories of starter homes in New York City: studios and 1-bedrooms ranging from $500,000 to $600,000, and junior-fours and 2-bedrooms ranging from $800,000 to $1.2 million.

Potential Starter Homes in Manhattan on StreetEasy Article continues below

Midtown

100 West 57th Street

$259,000

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1

Midtown

465 Park Avenue

$495,000

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1

Inwood

70 Park Terrace West

$375,000

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1

Yorkville

425 East 86th Street

$579,000

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1

Midtown South

244 Madison Avenue

$499,999

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1

Upper West Side

336 West End Avenue

$599,000

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1

East Village

155 East Second Street

$425,000

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1

Lenox Hill

520 East 76th Street

$550,000

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1

South Harlem

1787 Madison Avenue

$400,000

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1

Hudson Heights

736 West 186th Street

$460,000

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1

Hell’s Kitchen

857 Ninth Avenue

$470,000

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1

Lower East Side

457 FDR Drive

$589,000

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1

Recently, Willig has noticed more of his clients skipping over the lower-priced starter home and going straight for a 2-bedroom or larger. “It could be due to student debt, uncertainty among millennials, or the desire to rent over buy,” Willig says. “But at the end of the day, it ties back to how expensive properties are here.” Forgoing that 1-bedroom starter home has allowed some of his clients more time to save, pay off debt, and arrive at a stable point in their career, when they are certain to be in the city for a while.

New Yorkers Own Their Starter Homes for Much Longer

The length of occupancy also distinguishes starter homes in New York City from those elsewhere in the country.

“A starter apartment here makes no sense,” says Micky Lalchandani, a real estate agent with Level Group. In other markets, buyers may look to occupy their starter home for two or three years. In New York City, Lalchandani says, it’s more like six or seven years. It just takes longer for the benefits of homeownership in New York City to pay off, in part because of higher closing costs.

“When you get around to selling,” Lalchandani explains, “You’ll spend about 10 percent of the sale price on closing costs.” If your starter home hasn’t significantly appreciated in that time, you could actually lose money after all is said and done. That’s why he stresses the importance of buying a place that offers flexibility and room to grow over the long term.

Potential Starter Homes in Brooklyn on StreetEasy Article continues below

Clinton Hill

372 Dekalb Avenue

$895,000

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2

Bensonhurst

1562 West 6th Street

$625,000

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2

Cobble Hill

210 Congress Street

$895,000

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1

Stuyvesant Heights

637 Madison Street

$899,000

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1.5

Gerritsen Beach

7 Bartlett Place

$798,000

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2.5

Midwood

1384 East 19th Street

$700,000

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2

Ditmas Park

2116 Dorchester Road

$729,000

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1.5

Bensonhurst

1502 West 1st Street

$725,000

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2

Park Slope

427 15th Street

$875,000

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1

Stuyvesant Heights

467 Hancock Street

$730,000

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1

Midwood

1733 Ocean Avenue

$759,000

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2

Wingate

406 Midwood Street

$640,000

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1

How Realistic Is Buying a Starter Home and Trading Up in NYC?

According to Willig, the practicality of buying a starter apartment and trading up depends on how long a buyer plans to occupy the property, and what happens with the market. “If a buyer has longer than a six-year horizon, chances are they will have the opportunity to ride out any waves in the market, pay down their equity, and see some tax advantages,” he says.

One of the first things Willig asks clients is whether they are open to being landlords in the future. “If you view your starter home as a long-term asset, buying early and trading up can be much more lucrative over time,” he says. If buyers need the sale of one property to finance the purchase of the next, and are only planning to occupy the apartment for three years or less, buying a starter home may make no sense. In that case, “Just wait,” Willig says.

Ultimately, buying a starter home is a personal decision, and one of the most basic rules of homeownership is that you should view your home as a home, not an investment. With that in mind, if you’re looking at buying a starter home, here are some aspects to consider.

What to Look for in a NYC Starter Home

• Low Carrying Costs: These include mortgage payments, property taxes and building common charges or maintenance fees. First-time buyers should focus on properties with low carrying costs, which will help them stay within budget. Banks also look more favorably on apartments with lower carrying costs. Willig advises that buyers scrutinize a co-op’s reserves and look out for any fluctuations in maintenance fees over time. If they’ve stayed steady, the building is likely in good financial standing and there won’t be surprising increases down the road.
• Improving Location: Lalchandani and Willig advise first-time buyers to hone in on up-and-coming areas where there could be more price appreciation over the short term. In Brooklyn, Lalchandani recommends areas south of Prospect Park, including Kensington and Flatbush, where apartments often offer lower carrying costs compared to similar apartments in Manhattan. Willig also suggests neighborhoods like Bushwick, where sale and rental prices are rising.
• Tax Abatements: Many new developments offer tax abatements, which lock in low property taxes. These can last anywhere between 10 and 20 years — usually much longer than a buyer would occupy a starter apartment.
• Renovation Potential: Buyers may not be able to control whether the neighborhood or market grows in value, but they can control whether the interiors of their unit become more valuable. Investing in interior upgrades is a great way to increase a property’s resale value over time.

[This post has been updated and republished.]

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