Buying Your First Home in NYC
Buying a home in NYC is complicated, but rewarding. If you're a first-time home buyer, or even a returning buyer who needs a refresher, this guide will provide you with tips and strategies for your home-buying journey.
A few of the topics covered in this guide include: how to find your dream home, how to find a buyer's agent, how to prepare for a co-op board interview (and what even is a co-op vs. a condo?), information about home inspections, home loans and mortgages, and much more! We hope these articles will help you make educated decisions and feel a little more confident as you begin this journey — whether you're a first-time home buyer or a real estate veteran. Happy home shopping!The New York City real estate market is unlike any other, characterized by its high prices, unique complexity, and fierce competition. Yet, despite the challenges, many New Yorkers dream of owning a home right here in the five boroughs. The process can be daunting — especially for first-time home buyers — but the rewards are immense. In this guide, we’ll break down everything you need to know about becoming an NYC homeowner.
Should You Rent or Buy?
Obviously, buying a home in NYC is a big undertaking. Prices here are notoriously high — higher than in other parts of the country, even when there’s a dip in the market. No wonder so many New Yorkers prefer to rent! So how do you decide between renting and buying? If you’re a potential first-time home buyer, ask yourself these questions:
- Do you plan to move soon? If you don’t plan to stay put for a while, it might make more sense to rent. “The benefit to renting is flexibility,” says Steven Gottlieb, a real estate agent with Coldwell Banker Warburg. “If you experience a life-changing event, like job relocation or familial changes, it’s much easier to pick up and move. You don’t have a large real estate asset to worry about selling.”
- How are your finances? Renting also allows you to remain more financially fluid. There’s no hefty down payment or closing costs to shell out, for one thing. And from a maintenance perspective, most repairs — plumbing, electricity, etc. — are the landlord’s responsibility, not yours.
- Do you love a particular neighborhood? Try “test driving” a neighborhood or building before you make a longer-term commitment to homeownership there. It’s a great way to learn about your surroundings and figure out commute times. If you’ve fallen in love with a neighborhood, buying is a great way to make it your forever home.
- Do you like to customize your space? If you own your home, you can (usually) hammer, drill, paint, or fully renovate it to your heart’s content. If you rent, you have to be much more careful, and you’re investing the time and money into something you don’t own.
- Do you want to build wealth? “Buying a home in NYC is an investment, both in terms of building equity and in tax and mortgage deductions,” says Parisa Afkhami, a StreetEasy Expert and agent with Coldwell Banker Warburg.
How Much Does an NYC Apartment Really Cost?
As in many cities, it depends on where you look, and the state of the local housing market. In NYC, it also depends on what kind of home you’re buying: co-op, condo, townhouse, etc. (find out what these are in the next section). According to the StreetEasy Data Dashboard, as of June 2024, the median asking price for a home in each borough was:
- Manhattan: $1,600,000
- Brooklyn: $1,100,000
- Queens: $660,000
- Bronx: $369,000
- Staten Island: $729,000
While there’s no perfect time to buy, it doesn’t hurt to stay informed of the latest NYC housing market trends. You can use the StreetEasy Data Dashboard for up-to-date median asking prices, sales inventory, days on market, and more. Additionally, the StreetEasy Price Index provides an accurate measure of home sale prices in NYC:
In addition to your monthly mortgage payment, you’ll have to pay standard charges like taxes and utilities, as well as charges not common in other cities, like maintenance fees for co-ops or common charges for condos (more on these in the next section). Of course, this is after a substantial down payment and closing costs.
Keep in mind that prices are almost always open to negotiation. “There’s no decision to make until you’ve negotiated something down,” says Mike Fabbri, a real estate agent with The Agency. “I encourage buyers to look 10% to 15% above their budget, with the expectation we can negotiate it down. Then we narrow in on two or three properties, and we make multiple offers. Whichever one we get the best deal on, we move forward with.”
Also know that condos tend to cost more than co-ops. But, while co-ops might be cheaper, you’ll have to undergo the lengthy process of being approved by the co-op board, and there are onerous down payment and other financial requirements — a big ask for many first-time buyers.
Co-op vs. Condo
You may be wondering about this distinction that seems to be unique to the New York City real estate market — and it is. One of the many quirks of buying a home in NYC is that you need to decide between purchasing a co-op or a condo. There are also “condop” buildings, which function as both; townhouses, or single-family homes that share at least one wall with another residence; and traditional free-standing houses in some areas.
A co-op is a type of real estate property in which buyers are actually purchasing shares of a corporation, and that corporation or “co-op” owns the building. Typically, the size of your unit corresponds with the number of co-op shares you own, and the bigger the unit, the more shares. Prospective buyers have to be approved by the co-op board (with the exception of sponsor units) — a process that usually involves an interview, references, and meeting strict financial requirements. Co-op owners are also required to pay monthly maintenance fees, which cover the building’s taxes and operating costs, and abide by the rules set by the co-op board. The majority of residential buildings in NYC are co-ops, but when searching for homes on StreetEasy, you’ll notice a more even split between co-ops and condos.
If you choose to buy a condo, you own the unit itself, and you jointly own the common areas of the building along with the other residents. Condos tend to be found in newer developments with more amenities, are generally more expensive than co-ops, and have higher closing costs (more on these in the next section). In place of maintenance fees, condo owners pay common charges, which cover similar things like building upkeep and operational expenses. Condo buildings have boards, but the approval process for buyers is much less intense than it is for co-ops. Condo owners are usually subject to fewer rules, with more flexibility for things like subletting and pied-à-terres.
Read our full explainer on co-ops vs. condos for more on the pros and cons of each, and how to decide which one is right for you.
Closing Costs, Taxes, and Fees When Buying an NYC Home
In addition to a property’s list price, you’ll need to factor in closing costs, which are the fees due at closing when finalizing the deal. They usually amount to 3-6% of the home’s purchase price, and are higher for condos than for co-ops.
Closing costs may cover a real estate attorney, bank attorney, mortgage origination fee, appraisal fee, tax escrow, mortgage recording tax, recording fee, title insurance, and more. Some co-ops charge what’s called a flip tax, which can be pricey, and some new development condos have additional closing costs, such as a transfer tax. If you purchase a home costing $1M or more, you’ll have to pay a mansion tax of 1-4%. And don’t forget the cost of renovations, if that’s also part of your homeownership journey.
“There are always unexpected fees, so it’s always worth asking upfront,” says Fabbri. “A good broker will find out everything for you before you even consider an offer.”
Is There a Best, or Cheapest, Time to Buy a Home?
Timing the market is tricky, but no matter how it’s behaving, the right time to buy will always be whenever it’s right for you. If you’re financially ready, and you want or need to move soon due to life changes — a new job, a growing family, etc. — it may be as good a time as any to start the process.
That said, there are a few rules of thumb buyers can follow. NYC real estate is seasonal, and typically, inventory peaks between April and June and then bubbles up again in October. Price cuts also rise in the spring and fall, especially after Memorial Day and Labor Day. You can observe these trends when looking at historical data using the StreetEasy Data Dashboard.
When a listing has sat on the market for a while, that can also be a great sign of opportunity. Home shoppers often avoid such a property, thinking there must be something wrong with it, but it may be a hidden gem, says StreetEasy Expert Karen Kostiw of Coldwell Banker Warburg. “It could be as simple as bad timing,” she says. “When you buck the herd mentality, there is an opportunity awaiting. Simple risk-reward economics at work.”
Interested in buying a home in NYC? Get in touch with our complimentary StreetEasy Concierge to learn about the NYC buying market and more.
What’s a Typical Down Payment on a Home in NYC?
The standard down payment on an NYC home is in line with the rest of the country: 20%, which leaves 80% to financing. Many co-ops have stricter requirements, such as only allowing 75% financing (a 25% down payment). Some new development condos will allow up to 90% financing, making homeownership a little more accessible to a first-time home buyer.
However, economic uncertainty has changed things. “Many co-ops have changed their financing policy,” says Steven Goldschmidt, Senior Vice President of Coldwell Banker Warburg. “They are reducing the maximum allowable financing and requiring buyers to put up more equity. For example, some co-ops that allowed up to 80% financing have now reduced the maximum to 70%.”
Banks may also ask for a larger down payment. While many are still looking for a buyer to make a 20% down payment, other banks require more. And some banks will finance as much as 90% of a purchase price of up to $3.5 million.
Regardless of what is required, the general wisdom is that the more money you can put down, the better. “Someone paying all cash or only financing 50% or less will have more leverage in negotiating with a serious seller,” says Fabbri.
Getting Preapproval for a Mortgage Before You Start Looking
Whether or not you’re a first-time home buyer, it’s essential to get preapproved for a mortgage when shopping for a home. Preapproval is a formal process in which a mortgage broker determines if you qualify for a mortgage of a specific value. Sellers strongly prefer a preapproved buyer, and it can give you an edge when an apartment has multiple offers. Note that preapproval is not the same as prequalification — the latter is less formal and doesn’t hold as much weight.
“Being preapproved will give you the upper hand over another buyer who isn’t,” says Alexander Boriskin, an agent with Douglas Elliman. “Sure, they can get preapproved at the request of the seller. But the person who comes in and shows that they already have their ducks in a row will be considered less of a risk, in most scenarios.”
Preapproval is also helpful for you, the buyer, because it gives you an idea of what you can afford based on the loan you qualify for.
Do You Need a Buyer’s Agent?
When buying a home in NYC, using a buyer’s agent can make the process a lot less stressful. Why? Because they do most of the work for you. “A buyer’s agent will handle all the details and keep you aware of any concerns or pitfalls,” says StreetEasy Expert Gerard Splendore of Coldwell Banker Warburg.
Plus, an agent often has insider knowledge of the local real estate market. In addition to walking you through the buying process and attending showings with you, they can help you come up with a bid on a home, negotiate your offer with the seller, recommend a mortgage broker, connect you with a real estate attorney, and more.
If you want a buyer’s agent with the utmost knowledge of the NYC market, consider working with a StreetEasy Expert. They have verified experience helping buyers purchase homes similar to what you’re looking for, and local knowledge of your desired neighborhood, building, or type of property. Reach out to the StreetEasy Concierge for buyers to get connected with the best Expert for your needs.
How to Put a Winning Offer on an NYC Home
Coming up with a winning bid is both an art and a science, and it’s another area where a buyer’s agent comes in handy. It’s up to you to offer what you’re comfortable with, but an agent can help you arrive at a strategic bid that will appeal to the seller and stand out from the competition.
A winning offer is also about more than just the purchase price: it’s the whole package. Work with your agent to put together a buyer’s packet, including all the necessary financial, employment, and tax documentation. Be sure to introduce the team you’re using for your purchase, such as your agent, attorney, and mortgage lender.
Manhattan Homes Under $1.5M on StreetEasy Article continues below
Your Offer Was Accepted! Now What?
Once your offer is submitted and accepted, it’s tempting to exhale and consider yourself a first-time home buyer. But don’t relax just yet! You’re not done. The next step is signing the contract, and there’s a deposit involved.
“When the final draft is approved by both sides, the buyer will sign the contract and return it with a contract deposit,” also known as earnest money, says Splendore. “This is typically 10% of the sale price, a ‘good faith deposit’ that goes toward the purchase price of the property.”
Brooklyn Homes Under $1M on StreetEasy Article continues below
What Happens Between Signing and Closing?
Once the contract is signed and the funds clear, you’re almost at closing. Co-ops, and some condos, require submission of a board package, which includes various financial, employment, and tax documents. Your mortgage lender has to process all the necessary paperwork as well. All in all, the time between offer and closing is typically 30 to 45 days, but two months is a good estimate to be on the safe side. For more on what to expect during this period, and for how long, see our article on how much time there is between offer and closing.
The period between signing and closing is all about waiting on the bank and the co-op or condo board. Generally, there’s an evaluation by the board, plus various inspections, appraisals, and walk-throughs. It can take a while — as in, months — and depends on if it’s a co-op or condo, how you’re financing the purchase, and other factors.
While the bank is working on the mortgage paperwork, buyers should not make major purchases or accrue any out-of-the-ordinary debt. “I advise buyers to keep all accounts current during this time,” says Splendore. “Don’t open any new accounts with credit card companies or stores, either.”
Queens Homes Under $1M on StreetEasy Article continues below
What to Expect at Closing
The short answer is: a lot of paperwork! Closing is usually a drawn-out process involving signing documents and exchanging large amounts of funds. The attorney for each side of the transaction (buyer and seller) will keep everything moving.
It’s a long step, but it’s the final step. And in the end, you’re a homeowner — in New York City, of all places! Congratulations.
Ready to buy a home in NYC?
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