As an agent working in one of the priciest markets in the country, helping first-time buyers in New York City find properties in their price range can be tricky. To help, StreetEasy calculated the best neighborhoods for an average NYC first-time buyer in 2016. In its calculations, StreetEasy assessed income data, mortgage-to-income ratios, down payment and mortgage interest rates. All accounted for, StreetEasy found that the typical first-time homebuyer in NYC can afford a home costing $524,050.
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The largest number of listings at this price point in 2015 were in Brooklyn, comprising 29.6 percent of the market, followed by Manhattan, which covered 23.1 percent of the market. In Queens, 22.9 percent of listings fell at or below the first-time homebuyer price point. The two boroughs with the least number of options for the typical first-time buyer in NYC were Staten Island and the Bronx, with 12.3 and 12.1 percent of listings considered affordable by these standards, accordingly.
[graphiq id=”hEeeYhfmA61″ title=”Density of Bars, Taverns and Pubs in New York City” width=”600″ height=”505″ url=”https://w.graphiq.com/w/hEeeYhfmA61″ link=”http://places.findthehome.com/l/71121/New-York-City-NY” link_text=”Density of Bars, Taverns and Pubs in New York City | FindTheHome”]
One neighborhood stands out in particular as being a prime fit for real estate newcomers: Riverdale had 1,087 listings in 2015 to fit the first-time buyer budget, 98 percent of which were co-op units. And as most NYC agents know, co-op units are typically less expensive than condos. According to StreetEasy’s November Market Report, the median sale price for Manhattan co-ops was $679,500 and $1.8 million for condos, making co-ops almost one-third the price of condos in the same borough. The price difference could be attributed to greater inventory, as adding “co-op” to your search query opens up more neighborhoods, especially those where condo developments and high-rises are foreign enterprises. West Village, Lower East Side, Chelsea and Park Slope are popular neighborhoods for co-ops that could help first-time buyers get a piece of Manhattan real estate.
The second-best neighborhood for first-time buyers is Sheepshead Bay, Brooklyn, with 702 affordable listings, followed by Forest Hills, Queens with 553 affordable listings. Bay Ridge, Brooklyn had 340 first-time buyer friendly listings and Washington Heights in Manhattan had 301 listings at or below $524,050. Agents representing families looking for space might want to direct them to Sheepshead Bay and Forest Hills, which had the greatest number of affordable two-beds in 2015. Jackson Heights, Central Harlem, Canarsie and Rego Park were all top contenders for affordable neighborhoods with two-bedroom units as well.
For sake of understanding exactly how StreetEasy came to their first-time homebuyer budget of $524,050, consider the following calculation: It assumed the age group for 2016 homebuyers will range close to the age group that saw the biggest increase in homeownership in 2015, which was 31 to 35 years old, according to census data. Then, adjusted for 2016, census data shows the income for that age group will fall around $66,738 per year. StreetEasy factored in that the monthly housing costs, which are the combination of mortgage costs and estimate maintenance, will not exceed 40 percent of the buyers’ monthly income. It also figured a typical first-time homebuyer applies and is approved for a 30-year fixed rate mortgage with a 3.9 percent interest rate, and puts down 10 percent of the total sale price upfront. Finally, total annual maintenance costs on the home would not exceed 1 percent of the home’s total value – so each year, first time homebuyers would only pay $5,240.50 toward fixing the interior and exterior of their property.
These are not only important figures to consider while reading StreetEasy’s calculation, but also as agents help first-time buyers navigate the shifting market in NYC, how much home they can afford and what homeownership costs might look like down the road.
