I always have a little chuckle when someone refers to their first home as a “forever home.” I wish I had that ability to predict my future.
34
The prices for these apartments are just mind blowing to me. I understand the differences between income and markets, and the demand for property in NYC, but increased income aside, and the desire to live that market, I am shocked at how little you can buy for so much money. I'm obviously a little bumpkin, but I have a 2 bedroom stone home in a nice neighborhood with a monthly mortgage payment just under $700, with a large fenced backyard. I'm not in the sticks, located between Chicago and Milwaukee, but I can't even imagine trying to buy in the NYC market. Sounds like an American dream few could possibly afford.
42
These astronomical prices plus absurdly high real estate taxes made me move out of NYC to DC. Not mentioned in this article is taxes. Once you buy your million dollar condo in NY you are likely paying $20k a year in taxes. In contrast in the DC area you will likely pay $4-5k a year and less in other parts of the country. I dont know how people afford NYC who don’t have trust funds or wealthy parents.
53
“We blew most of what we had on a wedding..."
There is a key...ELOPE and ask for cash for downpayment savings!
Do not feed the wedding INDUSTRY, but save for your life together. Much less stress down the line!
137
I think the article is saying that for those of us in high cost of living cities, this (stop shopping, stop eating out) is what you do.
The difference is now you really do need two incomes to get a family sized house. 20 years ago, we bought a house in a nice suburb, had child number one, and about 18 months later my wife quit working to focus on our son's special needs. We were fortunate, because on a single income we could still have basic cable TV, pay for a week in a small cottage on Cape Cod, and get cheap takeout once per week.
Child number 2 is about to head off to college in the Fall. So my wife and I are talking about selling the house in the next few years. Will we spend less and have some $$$ to gift the kids for a downpayment eventually? Probably...otherwise I have no idea how they will ever be able to live in the same metropolitan area as us.
25
The median down payment for s home in NYC is nearly $200k, wow! That’s more upsetting to me than parents helping their kids. That’s what families do if they are able.
However needing a mini-fortune to buy a home in NYC is a big problem. Especially when the median income in the city isn’t that high.
27
My daughter and her husband just bought a condo and are now first-time property owners. How did they do it? Him: trust fund from his parents. Her: monthly income supplements from my husband and me.
But for the fact that parents are subsidizing their children's home purchases in our area, the prices of homes would be far, far lower -- and affordable for people like my daughter and son-in-law, who both have jobs and whose total income is around $100,000. The notion of lower home prices if parents don't provide subsidies must be true, because home prices necessarily respond to what potential buyers are able to spend.
So, yes, we parents are enabling our kids to buy homes, and at the same time compromising our own economic stability and knowingly driving up the cost of housing.
And there's no way to stop the madness.
48
Ms. Caron, what a great article! I recall purchasing our first home in 1981 - I was earning $17,500 as an accountant, and my wife was earning $18,500 as a pharmacist. We made an offer to buy a home, but were turned down because of our debt ratio. The seller thought we were a good risk, and she financed the purchase..at an adjustable rate loan starting at 10% and capping out at 16%. It was the best decision we ever made! Buying a home isn't for everyone, but, it's an opportunity for those disciplined individuals that can made the commitment. The FHA has programs for low down payment, first time home buyers, as do Fannie and Freddie. However, I would like to point out,reserves are important to have in the event of an emergency. It was so inspiring to read the stories above and the sacrifices made to have home ownership in America.
14
It's very fulfilling emotionally to own but in high cost markets renting is much more affordable. Such market have strong tenant rights laws and you typically can rent a place nicer than you could buy. Taking money from retirement accounts probably not the best idea.
21
I didn't own a home until I was 43....and it meant saving a ton of money over about ten years to be able to put 20% down. Sold that during the high-flying spring of 2006 and made almost $230K. I then put down 30% in order to make the payment easier then the property lost almost 30% of it's value in 2008. But now it's back up and worth over $100K of its original price. It's hard to do---especially when you do it alone--but it's mine and I love it!
29
Ah, looking forward to reading these comments for:
1) excoriations of people who get help from their parents.
2) wonderment that people don't move the Oklahoma burbs where you can get a four-bedroom for $235,000 and the restaurants are actually pretty good!
94
When I was younger I saved every bonus, all the change from the cushiosn as well as the laundry pilefor my downpayment. It was important for me to pay the 20% to avoid PMI. I was single and 25 so it was difficult for me with a low end job. I think if parents can help that would be great but only if you can afford to and have your own fiscal life in order. Don't go into debt for it because you will have your own bills and retirement comign up.
18
Unless you're a movie star or a Wall Street hot-shot, what would possess someone to buy property in NYC? You get nothing for your money.
10
@Chris Rockett, you're living in the greatest city on the planet? Sounds like a pretty good reason to me.
29
@Chris Rockett. Bragging rights to those they left behind. Then they leave after a few years for something they can afford longer term.
7
Can we get the name of George Parson’s financial planner??
115
@Madison My thought exactly!
6
@Madison if you stuck $50k in a basic, vanilla S&P 500 index fund starting in February 2012 and just kept holding while reinvesting dividends until August 2016 (4 and a half years) you would have nearly doubled your money too (you'd have about $86k). There's probably a number of different months during this great bull run stretch you could use and still end up with a similar result.
The planner likely didn't do anything special; he or just rode the wave of a bull market. Only difference is the planner charged an arm and a leg for his services while the same result could have been reached for pennies on the dollar.
48
"As housing prices continue to outpace wage growth, it has become harder for first-time buyers to save up for the biggest purchase of their lives ..."
“'People will go to extreme measures to buy here,' said Jason Haber, a broker at Warburg Realty, a luxury agency in Manhattan."
It's not just NYC. In my small (pop. 6600) fishing/logging town housing costs long ago surpassed wages as retirees from elsewhere cashed in their local housing cost increases to come here. I'm not certain I could afford the home I have now (bought 20 years ago) in today's market...
14
NYC is fabulous. No doubt about that. However, folks, there are thousands of other smaller cities throughout the US with affordable housing, great neighborhoods, excellent cultural attractions, great restaurants and theatre etc. etc. You might want to broaden your horizons.
37
@BA, you might want to consider that for many of us there are tons of reasons why living in NYC, despite its high costs, is worth it. I continue to be amused by the people who can't see the advantages - many of which are free or cheap - that keep us here. I'd go crazy in any other place in this country (I've lived in them many decades ago). The cultural opportunities, the diversity of residents, the not-needing-a-car, the job opportunities, on and on the list goes.
Finally - to all of you who can't fathom why we stay here where there are cheaper places to live - consider this: different strokes for different folks! I'd rather live in a studio apartment in Manhattan than a mansion in another part of the country.
Likewise you prefer something else and that's great. Please respect the differences because I respect yours.
78
How about including couples with a child, children, or plan to have kids and good schools are factored into the equation?
Some parents will be educational pioneers while others have the money for private schools.
12
On the surface, this article would seem to be nothing but bad news. Astronomical prices no one can afford. Have no fear! The Progressives are on the case: the recent decision to tell Amazon what the company can do with their $150K jobs, plus the new tax on high-end condos that their buyers CAN afford, means that NYC real estate prices are headed in only one direction: Down, and likely down a lot. Meaning that for those with rock-solid jobs, you're going to see a Buyer's market the likes of which the City has seen in years, maybe decades.
AOC and pals want to bring affordable housing to the Big Apple? Well, they're going to, all right.
7
All of these homes sound like a steal.... the San Francisco Bay Area must truly be the most expensive housing area in the country.
24
@Malinda Walker As someone who has bought in both Manhattan and SF Bay Area, I will tell you that you get a lot more in SF for the money. You really should look at price per square foot: my Manhattan neighborhood is currently running at over $2,000/sq.ft. San Francisco is at a little less than $1,000/sq.ft.
18
The key phrase here is: With help from Mr. Hildreth's parents.
Show us the money.
39
The Daily News had a headline yesterday which speaks to people who can't afford to read the New York Times but live in New York. 41% of people in New York say they can't afford New York.
16
"Queens has long been a more affordable option for first-time buyers, although the borough is starting to catch up to Manhattan and Brooklyn."
A hint: by the time the NYTs offers that insight, you are far too late for any "bargains" in Astoria or Woodside or Jackson Heights. And the mainland Chinese have got Flushing covered by now. Just a head's up from one who knows, one who has lived in Queens for the last twenty years.
More real estate nonsense from the newspapers.
29
While we ponder cause for why prices are where they are, don't forget to send a thank you letter to Greenspan, Bernanke, Yellen and now Powell.
These "mighty folks" print up money and it gets reflected in asset prices, including housing.
Think of a fish tank. Objects (assets) will float at the water level (credit).
Add trillions in credit/ print money and assets float to that level. Why do you think Netlfix is at $350+?
6
I don't think that I would have given up the rent controlled apartment @ $1350 per month to move across the street for 'home ownership' at such great cost.
87
Some really bad financial advice in here... pull money from your IRA, count on a gift from parents, pay for a kitchen reno with a credit card, etc.
Owning a home is not a great "investment". It comes with added costs and responsibilities and a lot of these folks would be better off renting.
114
I find this article very telling. The two white heterosexual couples were able to get help from their parents. The single mom of color had to work seven days a week. The dual-income white gay male couple were able to do it on their own without going to extremes to save money.
These disparities in who can buy a home on their own and in what it takes to do so are very disheartening. As a lesbian and teacher who is married to a woman with a similarly low to moderate income job (that necessitates a masters degree and tens of thousands of dollars in student loans) and neither of which will receive help from our families, I do not see us buying a home before either of us turn 40.
I wish the NYT would recognize these differences in access instead of merely glossing over them.
216
@LC87 I follow every step of your argument except the part about sexual orientation. It still exists, I know, but it is less and less of a factor than ever before. The real issue is money -- the great equalizer. And the last two years tax returns. (A hint: coop boards have an absurd prejudice toward W2s as opposed to 1099s.)
I spoke with a woman recently in my Jackson Heights neighborhood, and she swears that she was refused acceptance to my coop in the late 1980s solely because she was a single woman. I believe her. That doesn't happen now.
Btw, buying by the age of 40 is hardly to be dismissed lightly. I was 48 before I, a single guy, could buy into a coop in Jackson Heights, and I probably got in in 2000 because the neighborhood was iffy at the time. And had I been sussed two years before or two years later, I wouldn't have made the cut although I made the same income. albeit with 1099s, not W2s.
24
@LC87 - As a white heterosexual myself with a low earning partner, I do not relate at all to the young couple whose parents contributed to their home purchase.
It seems less to do with them being white or heterosexual than with them having wealthy parents however.
The only people I know in my age range who have purchased homes in the expensive Boston area either had a high-earning partner, or more frequently, family assistance with the purchase. (And I am over 40)
79
@LC87 I am Black and live in Washington DC. Housing prices are skyrocketing here also although not at the levels experienced in NY. It takes planning and a strong family unit to create wealth on low or middle family incomes.
My neighborhood is changing fast with infill building, developments and single family renovations. I live in inherited property and will leave it to my sister's children upon death. I estimate that I can leave this world with at least a $500,000 estate probably more.
I am in my early 70's and still working as a waiter. I enjoy this very much and it keeps me active and engaged with life. My income is not high by any means. My advice is not to squander your blessings, but magnify them and pass them on. If your family does not have this tradition, well it has to start with someone.
116
I would only buy if I could afford a fantastic apartment in my neighborhood of choice. Otherwise, it's just not a good value or use of one's money. Who wants to squeeze into a mediocre apartment in a less-than-desirable neighborhood just so they can own? Nope. For my money, I'm going upstate for a weekend house. I'd rather have 1600 square feet on five acres and stay in my pre-war rental in brownstone Brooklyn and rent my Catskills house on AirBnB and make money while having an escape.
42
People still go to the Catskills??
7
@ NYC Dweller, Brooklyn Dog's not kidding. Check out AIRBNB listings
3
@Brooklyn Dog Geek
Buying in upstate is the hip thing to do right now. Great if that works for you. Personally, I would never willingly risk owning a property I couldn't afford independently of all other expenses. Paying a mortgage on top of rent seems insane if you're relying on AirBnB to break even. Presumably you have a car if you're heading to the Catskills regularly. Try a tent next time.
That said, normal people buy for several reasons:
1) Equity. Why pay someone else's mortgage?
2) Housing prices. You probably cant afford your desired neighborhood by the time you want to buy there anyway.
3) Interest rates. Interest rates are the most expensive part of a house until you have equity. Small differences mean big dollars. One percent in interest can mean more than your entire down payment.
I got my numbers locked-in early so I'm not selling without a really good reason. Sorry you weren't so lucky.
2
My spouse and I purchased our first home, a two bedroom Westchester co-op in 1998 and used savings and a loan from his parents to put 20% down. We sold a year later, made a $40k profit, paid his parents back and used the rest to buy our home. Since then we aggressively pay principle with the goal of clearing enough from our home to live mortgage free in retirement. If you will really accumulate equity then this is the way to go but if you refinance, you may as well rent as the tax benefits of ownership are now gone
3
wait a sec.
A couple gave up a $1350 rent stabilized apartment in Washington Heights to move across the street for $400K?
I’m not sure I follow the logic, other than maybe the drive to own and not rent...
56
How much better would it be for everyone if homes were not investment vehicles, if their prices stayed relatively flat over time?
8
@M. Population is higher, household size is lower. Land area is not expanding. Housing is going to increase in price. Simple supply and demand.
8
@M.
That would require that housing be controlled by the state, at least in would you could legally ask to sell it for. You OK with that?
3
"Student loan debt needs to be paid down first or refinanced."
Student debt is one of biggest hurdles my generation faces when it comes to home ownership. I structured my early life around not asking parents or in-laws for monetary assistance. I wanted to make my own way, because it was my life and my choices, good and bad. That helped me mature quite a bit, but my policy of fiscal independence came crashing down after college and our daughters. It is nearly impossible to save ANYTHING with a young family and college debt, much less enough to put down $20,000+ on a down payment (that's $200 a month for 100 months or $500 for 40 - not going to happen in 2019).
Eventually, though, I realized that asking for help purchasing a house is not like asking for help buying groceries or pay rent. Houses are investments; you will get the principal you pay on your mortgage back (assuming the market increases or stays stable) and you will probably get some return on your improvements. That is entirely different from paying a landlord and hoping you didn't ding the carpet too much to get your deposit back.
You should absolutely save for a house. But young graduates shouldn't be afraid to ask family for help, because investing is an inherently difficult thing to get into. If your parents or aunts or whoever want to help you invest, you should thank them, work out some terms (or call it a down payment on your inheritance), and graciously accept.
15
NYC Home Prices are disappointing when you think about what you get for the money. But as this article points out saving for the down payment is key to entry.
One way to help with the savings is to work with a buyer's agent, like myself, that offers a buyer's rebate on their commission. This means they actually split the commission they earn from the seller with you the buyer. This can save you as much as 1.5% off the purchase price. In terms of a 20% down payment that helps with about 7.5% of the cash. Every little bit can help.
Most people think working with a buyer's agent will cost them, but the truth is that in most situations their services are free. With this setup, they are actually paying you!
2
The best advice for a young homeowner I see in this article is how I got my first place in the city...spend like you did in college, regardless of how much you make. Too many people build a lifestyle under the assumption that job advancement will catch up to their desires. I did not make anywhere near a six figure salary to get my first condo and I believe buying a place in NYC is attainable for anyone. I don't get 20-early 30 somethings I see (and sometimes now rent my condo out to) who make much more than I do now in my 40s, and yet have so little savings.
On a side note, am I the only one who had to look up what NoMad is? Guess I'm out of touch.
12
My grandfather moved with his young bride(16!) to Detroit in 1936. He had a good entry-level job as night auditor for a hotel. To raise a down payment for a house, he sold his clarinet. This was sufficient to purchase a new 2 bedroom tract home in Oak Park, MI. My grandmother was a full time home maker.
The relative value of housing to income has changed so drastically.
Imagine that scenario today.
59
@Patrise
Just change the clarinet to a Stradivarius or Amati.
19
What's funny is the people in the know say it's 3 percent inflation pretty much every year. The problem is I can't find any product or service that hasn't risen their prices way beyond that 3 per cent. I'm still in the not knowing....maybe that dollar store can save us.
1
I found this article illuminating and sad. Having grown up in Brooklyn, leaving forever at 17 for college, never returning, I groaned when my daughter decided to move to NYC post-college. What had I done wrong? While we visit often, my husband, not a NYC dweller, has a 3 day patience level, we could never, ever return to live there.
As life goes, our child, married and has lived in Manhattan for 10 years. Now, after scrimping and saving, she and her husband are escaping across the river to Ft. Lee, to a new apartment-2 bedrooms, 2 baths, with a view of the Hudson. While managing to save a substantial sum due to a low rent in Manhattan in a not desirable neighborhood, they looked around and decided for what they were now willing to spend, it was not worth it all to live in a hovel. With a baby on the way, the desire to escape only intensified. The rent will be a little less than Manhattan, her commute to 169th street super short, and the space beautiful and new. And, they will continue to be able to save for the home they will be able to buy in a few years.
There are choices for all these folks. Living in the 5 boroughs require steel and sacrifice. Yes, there is fun, stimulation, and some rewards. But, ask yourselves: is it really worth it? There are other ways to live: with a little more space, sky to see, less congestion. And, sometimes, commutes that are not much longer than what you may have now. And, if you have children, better places to be.
40
An expat-from-NY-to-HK-friend visited recently and mentioned that she and her husband were thinking of returning to the US because their children will be looking at colleges. (This was not their original plan.) In the late aughts, and against my friend's better judgement, her husband convinced her to sell their UES apartment (90s/York), arguing that after the financial crisis, NYC real estate would be worthless. (I know, I know ...)
She's been keeping tabs and knows that she could never regain what they had here after spending on the even higher costs of living in HK. She's now looking at Philly. I think she was relieved that I concurred with her decision to focus outside the NYC metro area when I mentioned that NYC is becoming more like Venice every day: for the wealthy and the tourists. The rest of us will end up elsewhere and the city will be poorer for it.
27
So... it seems like it comes down to either timing the trough and peak of a market cycle to double/triple your money, or receiving a hefty inheritance.
Oh well.
27
The article fails to mention the 24 month liquidity requirement most co-op boards also want to see - meaning once you have paid the down payment that you still have enough money in your bank account to cover 1 year of mortgage and maintenance or 2 years of maintenance after closing costs.
This requirement makes it very difficult for even people who have saved up enough to cover a 20% down payment to buy. Wish there were more condos available in NYC.
72
My wife and I have a combined income of somewhere close to $200,000.
I have been lucky enough to inherit a trust of $400,000.
We've been looking for an apartment to buy in Brooklyn for 6 months and have yet to find one affordable that still accommodates our needs (3BR *gasp*)
Real estates agents kindly have explained to us that we're very unlikely to find a 3BR in a neighborhood that has access to good public schools. They tell us this with almost knowing-pity in their eyes.
This city is so aggressively un-affordable for families I find it offensive. We're now looking at houses North of the city. Good luck to couples deciding to stay - I hope you have some deep pockets.
43
@Nick With respect, there are a lot of properties available in Brooklyn that would be affordable for a couple in your income bracket and with that kind of resource for a down payment. If you're looking only in D13 or D15 because you feel that those are the only decent schools in Brooklyn, then yes - you're probably better off moving out of the city.
12
@Nick I’m sorry you’re not entitled to a 3br in an area with good schools in NYC. You have options many do not. If you don’t want to avail yourself of them because you’re focused on a small area in one city, in one state in our country, that is on you.
12
I love how the article is repeatedly saying "save, save, save" and then three of the couples got help from their parents and other dead relatives. For people who don't have those lifelines or expectations of inheriting anything (children of immigrants, children of lower earning parents) this isn't particularly helpful advice.
226
@Josh No kidding. My husband and I both came from lower middle-class families. There was no money to help us with college, let alone to buy a house. We both went to undergrad and then graduate school on loans and scholarships. He paid off his school loans quickly (engineering degree, relocation bonuses, etc.). It took me seven years to pay-off undergrad and law school. The year before I paid off law school, we bought a small 1950's ranch in a Washington, DC suburb. I believe the down payment was 40K, and it came entirely from our savings. We sold it nine years later at a 100K profit, and bought a house in California. We sold that four years after we bought it for a 210K profit. When we bought our new house back in the Washington, DC area, we had a 600K down payment from equity and appreciation. We're increasingly paying-off the remaining balance, and hope to have it paid-off in four years. My point is - this can all be down without any parental help/inheritance/etc., but - it helps to work very hard, be smart with your money, and well, get a little lucky in your buying/selling timing. My husband and I never got a dime from our families for anything.
29
And then save to pay the federal, state, and city taxes. And then save to pay for food which is about 20% more than in other places. And save to pay for a restaurant meal of mediocre food because the landlord is charging the restaurateur outrageous rent because the city is charging outrageous commercial property taxes.
Washington Heights? Jackson Heights? No thanks. But stay there.
Annapolis has just the right amount of residents.
27
Don't worry, I'm pretty sure almost no one is considering a move from NYC to Annapolis. @george eliot
17
My daughter moved out of NYC five years ago realizing she would never be able to afford the housing and schooling in NYC. Living in Ohio has made her life manageable with a beautiful home. In a good school district which is free, and affordable child care. Yes she missed the life in NYC with the excitement, restaurants and museums but when all is said and done she realizes that money saved in a town with reasonable living expenses can buy the excitement on vacations.
72
@Letmeknow
In a good school district which is free,
Free? Really? Does Santa Claus pay for it?
3
Maybe if we stop allowing foreign investors buying houses with straight up cash it would help with then issue. Vancouver sold out to foreign investors and resulted in empty units and those investors not willing to budget in their outrageous rent costs. Now Vancouver is trying to fix the issue they created.
109
@Summer Lee
Only carve out left for money laundering is buying real estate. Pay in cash and at a lower the price with a side payment to avoid some taxes. Same as it ever was. People with the money make the rules on who keeps the money.
16
@Summer Lee
So you want to prohibit property owners from selling to people of whom you don't approve? Price controls never work.
About 20 years ago, we rented on the UWS. A two bedroom coop was the next step, but after adding it all up, and factoring in the all important "schools" question for kinder, ended up searching the burbs and finding a very nice home 40 minutes outside Grand Central by train. Had we somehow been able to buy that co op, however, it would now be worth at least double the nice suburban house...but I've heard enough about fighting with the NY Public School System to get your kid into the good school that I'll take sanity over a 212 area code.
24
My wife and I love NY. I proposed in Central Park. But let's face it, I can afford a house in Virginia without help from parents. In fact, we've owned several places over the years trading up each time and generating rental income. Sorry New Yorkers, awesome city but I really don't want to hear whining about finances when there is a country of alternative choices.
PS, wife and I both paid our college with no long term debt and while not Ivy League schools we still landed 6 figure jobs through solid performance and diligence.
49
@James
"Sorry New Yorkers, awesome city but I really don't want to hear whining about finances when there is a country of alternative choices."
But thats just it! There is NO alternative to New York City. And to intimate or pretend otherwise is to delude oneself.
People who are in sync with this City - the acknowledged Capital of the World - are NOT simply shrugging their shoulders and saying 'oh well, Norfolk is virtually the same so lets just live there'.
There is no comparing the big Apple with oranges - and people who try to do that wind up sounding defensive and silly.
32
@James
Let's see: NYC or Virginia. NYC or Virginia. Hmmmm.
Yes, NYC. Definitely. Without question.
9
I live in San Francisco, where the median home price is over $1.3 million. Except for the last couple, the prices in this article seem really reasonable. I'm not familiar with New York real estate - are the other properties far from Manhattan and inaccessible to transit? (I'm imagining them as analogous to buying in, say, Vallejo or Tracy in the Bay Area.)
11
@V Former Bay Area resident here. I couldn’t agree more. Astronomical prices. Crazy property taxes. And these are only getting higher as more IPO money floods the Bay.
I had to laugh/cry when the property brothers from HGTV did a show upgrading 2 homes in “San Francisco” when the homes were actually far out in the East Bay, one north of Richmond, and each of those sold for a million dollars after being fixed up, only generating less than $20,000 in profit after all the money that had been poured in to fix them up.
Home ownership is the new opiate of the masses - keeping us on the hamster-wheel of distraction ...
23
@v Californian to NYC transplant 17 yrs ago here definitely not like buying in Vallejo or Tracey. Not that far out at all. It’s hard to drawn analogies as New York is like a multi pronged octopus with relatively inexpensive tentacles in many boroughs remaining at least comparatively. If Manhattan/downtown SF would be analogous epicenters, then buying in Washington Heights is still northern Manhattan, just the farther uptown. Jackson heights would be like Oakland (distance wise). St Albans is a bit further out than Jackson heights. And of course that last apartment in the article is in the middle of everything hence the price tag. There’s still a diversity of housing stock which is reflected in the prices. For example coops are relatively cheaper. I think the main difference is that NYC still has neighborhoods that are considered “undesireable” by the mainstream whereas SF doesn’t seem to have any of those left.
6
SF to Brooklyn transplant 17 years ago. Terry explains it well. Plus, a big difference between the two cities is the size of the units. The units in New York City are much smaller than in San Francisco. If you compare on a price per square foot basis they are probably similar.
3
Inwood. Three modes of transportation: the #1, the A, and the Metro North. It has the only old growth forest in Manhattan and the only salt marsh. Inwood prices are much lower than the rest of Manhattan. I can be in midtown in 20 minutes on the A after hiking the forest hills.
11
@SN And so I can rent a modest one bedroom for $2K? Or buy, if I can meet the requirements, for $350K. What a deal.
2
@gking01 See if you can do better anywhere else in Manhattan. And there are places for less than the prices you mentioned.
3
Look, this isn't the 1970s anymore. I had a nice apartment in 1979 -- but way out in Brooklyn -- for $375 a month. You really expect something nice in 2019 in the neighborhood of your choice for only $1000 a month?
4
I am a real estate agent, and I can tell you, perhaps without data, but certainly anecdotally, that family gifts and/or inheritances are huge contributors to home purchases. And with great frequency, we see these “all cash” purchases, which are merely parents outright buying the home for the adult children, or perhaps serving as the lender for them. All cash is a tremendous advantage when there are multiple offers for a property.
Think about it, if 40% of home buyers have incomes over 100k, that means that 60% do not. It would be very difficult for me to find a property for anyone with that income, once you figure mortgage, closing costs and monthly maintenance. And how could someone making, say, $60,000 possibly both live a life in NYC with rent, student debt, food, metrocard, etc possibly save tens of thousands of dollars for a down payment? Answer is that they can’t.
There is vast wealth , and wealth disparity, in this country, and the inter-generational transfer of this wealth could not be more on display than right here. Take it from someone who does this for a living (oh, and I am a renter).
273
@Donald Thank you for the dose of reality. I appreciate your clear and concise analysis of the situation as pertains buying in New York City, my hometown. There is no way one that is renting can save for purchasing an apartment these days.
I live in Maryland now in a home that I own, having left the city in 1989 in my mid 30s. Perhaps back then I might have been able to buy in NYC (I sincerely wish I did), even though back then my income then might not have been quite enough. Now, it is totally out of the question, and I often ponder how I would be able to return to the city I still miss.
With today's astronomical prices, not to mention adding the common charges, as you so rightly point out, I can't see how someone making $60,000 (which was once considered a not-too-bad salary) can afford to buy there today. I make a bit more than that, and still would not make enough to buy today. If I did return, I would simply have to rent, period.
I only see the wealth disparity growing and growing, making it harder and harder for those of average means to even hope of buying.
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@Donald
Happily there are many many many affordable places to live besides,NY, or Boston,SF,or Wash,DC.
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Sending this article to my 20 something son. Maybe he'll hear the message since it's not me speaking!
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You can’t refinance most student loans to get a better interest rate. That needs to change.
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@B My husband and I both did. I cut my interest rate nearly in half.
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Yes you can, you just have to go to a private lender. These days they will give you a great rate (think sub-4%) if you have a good credit score. The downside is you give up the benefits of a federal like deferment and income-based repayment. But going from 8% to 4% on $80k was worth it, in my opinion.
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Tell us how you did it.
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I was born in 1952, a white suburban doctor's son from Colorado, and I am still reading about everyone getting onto the realty ladder -- for the last thirty years -- with mom and dad's help.
I bought in 2000 in Jackson Heights without help from mom or dad (never mind that I would have taken it were it available) at $75K. One bedroom, historic district. No one noticed or wanted the neighborhood in 2000. And I had left after a decade in Greenpoint, when no one wanted that neighborhood -- I couldn't afford by then to buy in that neighborhood.
Trust me, nothing is for sale in Jackson Heights at $185K now, at least in the historic district, my neighborhood. My question remains consistent over the last thirty years: how does one, never mind a single person, do a down payment without mom and dad? And what does that tell us about the middle class prospects in NYC, including the last outpost -- Queens? (Okay, the Bronx is the really last outpost.)
Mom and dad, if they exist for you personally, can't be everywhere all of the time. Then what?
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This wonderful piece should impact all of us since at it's heart it
explores the infuriating waste of money we are all habitually
practicing. It's inspiring to read how these terrific people set goals, did without, and succeeded in profound life improvement.
Bravo to all of them, and the parents who graciously kicked in help, and thank you for introducing them to us.
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@Kathy dePasquale
Some of us, silly us, continue to concern ourselves with those that "set goals, did without, and succeed in profound life improvement"...albeit without mom and dad's deciding factor of a down payment. Their numbers are far, far smaller. That part of the American dream fantasy story seems to have passed you by...
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Why is it acceptable for a middle-class apartment to cost over one million dollars?
New York has morphed into a city for the one percent.
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@Von Jones
NYC is city where sanitation workers make close to six figures, cops routinely make over six figures, waiters/bartenders can make $500 on a good night, etc. This is a city where people make a good living. Some people don't do well because they sit around and wait for things to be handed to them - in this article, by mommy and daddy. In 2012/13, wife and I paid off about $200k in student loans and then saved up another $220 2.5 years later for a downpayment on our place. Four years after purchasing, we have paid off about 11 years of our 30-year mortgage. We expect to pay off the mortgage in the next 3-4 years. Please note that we made a lot of personal sacrifices to save up that much money in such a short period of time, including living significantly below our means. My point, NYC is a place with lots of opportunities whose residents often seize those opportunities. Hence, there is a large group of workers whose household incomes are in the $150k per year range - I am thinking about married teachers, cops, sanitation workers, transit workers, etc. As a result, the economics work to the extent that there is a market that can support the half-million dollar housing costs. BTW, $500k is not buying much of a home nowadays; I would say that $750 is your starting point in NYC's five boroughs - middle class neighborhoods that is. You can probably find less expensive homes in less desirable neighborhoods with little amenities and/or transportation alternatives.
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@Von Jones I've lived here for thirty-odd years. NYC has only recently morphed into a city of the one percent? I thought that was only true of Park Slope or Williamsburg.
San Francisco is worse, if you can imagine.
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Absolutely true. The middle-class people I know, past and present, bought their houses and apartments only when they were in their 30s and 40s (and late 40s) after having worked and saved money. And then spent 30 years paying off mortgages that in the old days were as high as 12%.
We can't do everything. We can't have a lot of stuff and take the kids to Disney World and still buy a house. Or, if we have a house, make sure there's enough cash for the window guys, the boiler guys, the sidewalk guys, the roofers, the plumbers, the electricians.
Borrow money to take three kids to Orlando? Really?
Some people, of course, those who run cash businesses and, obviously, those who are wealthy, can and do pay cash. That's them.
Others who already own houses see the stock market tanking, cash in their paltry, shaky stock portfolio, and pay off the mortgage.
There are vast neighborhoods of houses all over Brooklyn. If you're not looking in any place ending in Heights or Hill or Slope, a house or an apartment is not necessarily an impossibility. Bring a good book for the train ride.
(I have written a version of this comment before. But if you know Brooklyn -- and If you're not a snob -- you can see that there are home-buying possibilities all around. I want to counter the usual misperceptions.)
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@B.
"Others who already own houses see the stock market tanking, cash in their paltry, shaky stock portfolio, and pay off the mortgage. "
I guess you do not follow the stock market closely because the S&P 500 has had an annual return of more than 16% per year for the last 10 years and is a big part of the reason the "rich have gotten richer" since the great recession.
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@B. "Others who already own houses see the stock market tanking, cash in their paltry, shaky stock portfolio, and pay off the mortgage. "
Wow. Agree with Bob in Penn. Me, I found a wonderful, under-priced rental, kept my investments in the stock market vs buying, and have down extremely well in the past few years. (And I have several times a down-payment.)
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To the two of you; Excellent that you were able to do well in the stock market; but 15-20 years ago, some people lost a lot. Just saying; they made a choice, right or wrong, to live debt free and then try to save for retirement again, and differently.
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