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Down the hole: Even down payments on NY homes are astronomical, study says

It would take a person earning a median income 116 years to pay for a 20 percent down payment on a home in Brooklyn Heights, making the neighborhood almost as expensive as Greenwich Village, where a 20 percent down payment would take 122 years to come up with.

By The Property Club Team
Whether you’re a renter or a homeowner, living in New York City doesn’t come cheap. Renting is becoming more and more expensive, which is why many New Yorkers are thinking of buying their own place. That’s not as easy as it sounds, as home prices in the city can reach sky-high levels. Opting for a mortgage seems like the best option, but saving up for a down payment can take some time. We’re looking at how long it would take the average homebuyer to save up for a down payment in 100 NYC neighborhoods.
Living in New York City is a dream for so many people around the world, one that is sadly becoming more and more unattainable. Rents have been on the rise here for many years, and nowadays, $1,500 a month will get you just 289 square feet of living space. That makes NYC the most expensive U.S. city for renters in 2019, surpassed only by San Francisco, and not by much. Finding a lovely NYC apartment for rent in a good location and at a reasonable price is becoming quite the challenge, which is why many renters opt for coliving, buying a place, or moving to another borough altogether. 

Homeownership – An Unattainable Dream in NYC?
Homeownership is one of those classic American dreams, though in recent years it’s become just that — a dream. Sure, there are those who can afford to live luxuriously in New York City, forking over millions of dollars to buy penthouses in sleek towers designed by famous “starchitects.” Luxury apartments selling for more than $60 million near Central Park no longer shock us at all, and that says a lot about the housing situation in the city.  
Not everyone has millions of dollars to spend on housing, with many New Yorkers unable to even save up for a down payment. The median household income in NYC is close to $64,000, according to CoreDataNYC 2018 numbers, while the cost of living is one of the highest in the world. Avoiding mortgages is not an option by any means, as saving up to buy a home in full would take more years than any of us has got left. So, what about that down payment?
We wanted to see just how realistic it is to try to save up for a 20 percent down payment, without spending more than 30 percent of your income on housing costs, to buy a place in the Big Apple. We looked at NYC neighborhoods across all boroughs, to see how long it would take to come up with a down payment on a house, a condo, or a unit in a co-op, based on the median household income for each borough. Keep reading to see what we found. 

It Takes Over 100 Years to Save Up for a Down Payment on a House in Greenwich Village or Brooklyn Heights
It will come as no surprise to anyone that Manhattan is the priciest borough when it comes to buying a house. If you want to save up for a down payment without spending all of your earnings in the process, well, the news isn’t great. In Greenwich Village, if you were to spend no more than 30 percent of your income on housing costs, it would take you 122 years to come up with a 20 percent down payment. Now, unless you’re a vampire, you don’t have that kind of time.
Greenwich Village is such a desirable destination for homebuyers for good reason. Its excellent central location, offering easy access to both the east and west sides of NYC, its quiet tree-lined streets and charming brownstones, the various celebrities who call it home, and the plethora of nearby dining, shopping and leisure destinations – all these perks and features inevitably lead to high prices and unaffordability. The central area of Greenwich Village is the fifth priciest neighborhood in New York City in 2019, with a median sale price of $2,665,956. So, if you want to live here, you’ll need a lot of money in the bank to be able to afford the mortgage payments. You can try renting instead, but you should be warned that rents in the Village are equally high, and there’s a good chance that you’ll become rent-burdened on a monthly basis. 
Manhattan might take the top spot when it comes to buying a house without becoming mortgage-burdened, but Brooklyn is taking up most of our list. Brooklyn Heights, in particular, is almost as expensive as Greenwich Village; it would take 116 years to save up for a 20 percent down payment here, based on the borough-level median income. 
Regarded as America’s first suburb, Brooklyn Heights is just a stone’s throw from Manhattan, more specifically, only one subway stop away. Located at the foot of the Brooklyn Bridge, the neighborhood is highly appealing both for New Yorkers and out-of-towners, with its historic cobblestone streets and beautiful townhouses. It used to be a good alternative for homebuyers priced out of Manhattan, but these days, that’s no longer the case. Rents and home prices here are pretty much on par with those found in Manhattan’s most popular residential neighborhoods. Brooklyn Heights is currently the seventh priciest neighborhood in NYC, with a median sale price of $2,530,000 – more expensive than Manhattan’s Flatiron District, Chelsea or the Upper West Side. 
Brooklyn, in general, is undergoing a renaissance, with developers investing in sleek luxury towers to attract both millennials and celebrities. The downside is that the borough is becoming more and more unaffordable for the average home buyer. The most affordable neighborhood if you’re trying to save up for a down payment is Marine Park, at #100 on our list; here, it would take 14 years to come up with the amount.

Unless You’re a Millionaire, You Can’t Afford a Condo in Manhattan Without Becoming Mortgage-Burdened
You might be thinking, well, houses tend to be pricier than apartments, surely, so maybe buying a condo is a better option. You might want to think again. Take Midtown Central, or the Midtown CBD, as it’s defined by the Department of Finance, an area of Midtown Manhattan stretching roughly between East 48th Street to West 42nd Street between Sixth and Second Avenues. If you want to put aside no more than 30 percent of your annual income to buy a condo here, it will take you 104 years to come up with the money for a 20 percent down payment. 
The situation isn’t peachier in other Manhattan neighborhoods, either. It takes 86 years to save up for a down payment in Tribeca, while Midtown East, Greenwich Village-Central, and SoHo aren’t far behind. The most affordable neighborhood in our top 10 is Little Italy, where it takes “just” 61 years to save up for a 20 percent down payment. 
Crossing the bridge over to Brooklyn, we see that Cobble Hill and Brooklyn Heights are the most unaffordable areas if you want to save up gradually. In Cobble Hill, you’d need to save up for 47 years for a 20 percent down payment. In Brooklyn Heights, you need to save up for “only” 46 years, which is not very encouraging. Cobble Hill is the sixth priciest neighborhood in NYC, pricier than Brooklyn Heights, with a median sale price of $2,550,000 in 2019. 
Queens’ Long Island City, currently undergoing massive development, is also climbing the ranks in terms of expensive NYC condos. It would take 18 years to come up with a 20 percent down payment for a condo here, based on the current borough-level income. Prices here may be higher than in other Queens neighborhoods, with a median of $1,037,500 in 2019. Still, they will continue to climb as investor interest strengthens, so this would theoretically be the best time to make a purchase here – if you can afford it.

Coming Up with a Down Payment for a Co-Op in SoHo or Tribeca Takes Over Four Decades
Roughly 75 percent of Manhattan’s housing stock consists of co-operative buildings, but they are not as popular among homebuyers as condos. The reason is that co-ops usually require a down payment of at least 20-30 percent, plus, potential buyers have to go through co-op board interviews and other approval processes. You’re also buying shares in a property, instead of a deed, so it’s a more grueling process that involves a lot of hassle. It’s because of this complicated process, where, as a buyer, you can be vetoed without even knowing why, and because of the higher down payment, that people prefer to opt for a condo. Consequently, co-ops are slightly more affordable, at least in theory.
In SoHo, it would take 44 years to save up for a 20 percent down payment on a co-op unit. Tribeca follows close, requiring 40 years of savings to come up with the money. Compared to the 100+ years it takes to save up for a condo, going for a co-op seems like a much better option, but four decades isn’t exactly a short amount of time to be saving up. Add to that the fact that even if you come up with the down payment, you might still have trouble getting vetted by co-op boards, and the process could be even longer. 
SoHo and Tribeca are by far the most unaffordable neighborhoods on our co-ops list. The Upper East Side then occupies the third and fourth spots; it takes 26-27 years to save up for a down payment on a co-op here. The Manhattan neighborhood where you can become a co-op owner in the smallest amount of time is Upper Harlem, where it takes just five years to come up with the 20 percent down payment. 
In Brooklyn, we once again have Brooklyn Heights at the top of the list. The neighborhood is the most expensive for buying co-ops, with 19 years needed to come up with a down payment of 20 percent. Park Slope and Prospect Heights follow close, with 18 years of saving up required in each neighborhood. 

Methodology: We calculated the average sale price by property type and neighborhood, using DOF Rolling Sales data, including sales of one, two and three-family dwellings, co-ops, and condos, to close from October, 2018 through September, 2019. We removed all sales with undisclosed sale prices. We added a five percent annual interest to a 30-year mortgage with no down payment and calculated the monthly mortgage payment. We then calculated how long it would take to save up for a 20 percent down payment, based on the calculated 30-year mortgage. The formula is based on the most recent borough-level median household income data, extracted from CoreData NYC (2018 numbers). We only included neighborhoods that had 20+ home sales with disclosed sale prices in the designated time frame, per each property type. That is why, for some neighborhoods, the results won’t be available for all three home types. Neighborhood boundaries were set according to the NYC DOF. 

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