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Buying a home in New York City
If you’ve always dreamed of living in the Big Apple, here’s how to make it a reality.
So you’re thinking about buying an apartment in New York City, but you don’t know where to start?
Whether you already live in the Big Apple or you’re about to move there, you probably know that New York City real estate can be amazingly complex. It’s surely less shocking, however, if you have an idea of what to expect.
Here’s what you should know about buying a New York City apartment: the city’s quirks, pros and cons of owning, how to find an apartment and more.
Why New York City is a different market than you’re used to
Real estate is complicated enough as it is. Combine that with a competitive and confusing New York City market, and many buyers see plenty of reasons to be nervous.
Buying is really expensive
It’s one of the least surprising statements in the world: New York City housing is insanely expensive.
Consider the median cost of a co-op apartment, which is around $800,000. By comparison, the median home cost in the United States is just above $200,000. In many places, you could buy a mansion for the price of a New York City two-bedroom.
And don’t forget about closing costs for an apartment, which are about 2% to 3%. On an $800,000 apartment, that means a cool $16,000 to $24,000.
The process can be brutally competitive
If you find an apartment you really like, chances are there are several other parties who are interested too. And many of them may be willing to pay well over the apartment’s listing price.
Bidding wars are all too common in New York City, so strap yourself in and prepare for a competitive purchase process. Don’t get married to your first pick — your dream apartment could require more searching than you think.
Co-ops vs condos
New York City apartments are largely separated into two categories: co-ops and condos. Choosing the right one is a big step toward finding the right apartment.
You get what you pay for
Co-ops tend to be older than condos — many of them were built before the 1980s. However, you’ll have a lot more to choose from, as the majority of New York City apartments, around 85%, are co-ops. Co-ops also tend to be cheaper than condos.
Condos tend to be newer, with more modern amenities and appliances. But you’re likely to pay more for higher quality.
You might not technically own your apartment
When you buy a condo, you own your apartment. You also receive undivided interest — or partial ownership — in your building’s common elements (elevators, walkways, garages, etc.).
When you buy a co-op, on the other hand, you don’t own your apartment outright. Rather, one corporation owns the entire building, and you get shares in that corporation. You also get a lease that authorizes you to occupy your unit.
Your board of directors can make or break your stay
A board of directors is a volunteer group of residents that manages a co-op or condo building, kind of like a homeowners association (HOA). Typically, a co-op board is more powerful and hands-on than a condo’s board.
For example, before you’re allowed to live in a co-op, the building’s board will scrutinize your finances and personal background. The board can deny your residency for any reason — and even evict you after you’re settled in. Compare that with buying a condo: You don’t have to be approved by the board, and the board can’t evict you.
Don’t forget about maintenance fees
Each month, you’ll pay fees for your building’s maintenance. For co-ops, these are called monthly maintenance fees. For condos, they’re called common charges.
The co-op maintenance fee includes your building’s operating expenses and your share of property taxes. Condo monthly charges include your building’s operating expenses but not property taxes. Remember this when comparing maintenance fees: You may need to budget for more than you think.
Pros and cons of owning New York City real estate
New York City is a renter’s market, and for good reason. There are numerous obstacles to owning an apartment, and the purchase process is far from a walk in the park. Still, there can be significant benefits to buying your own place.
Benefits of buying an apartment
- Create equity. Each time you pay your apartment mortgage, you build equity — ownership in a property. That doesn’t happen when you pay rent to a landlord.
- Tax benefits. When you own your own apartment, you can deduct property taxes and mortgage interest from your income statements.
- Higher quality spaces. Co-op and condo units are typically more comfortable than rental units, often boasting larger floor plans and newer appliances.
Downsides to buying an apartment
- It’s expensive. Apartment prices are nothing to sneeze at. And you’ll need a chunk of cash for fees, taxes and your down payment.
- You’re responsible for maintenance. As a renter, repairs are on your landlord. When you own your apartment, you front the repair costs.
- Long-term commitment. If you want to buy, take the long view. Many experts say you should keep your apartment for at least three years, otherwise you’ll lose too much money on fees.
How to find an apartment in New York City
If you don’t know the city or it’s your first time buying an apartment, consider finding a real estate professional. A broker might cost you a pretty penny, but they can be indispensable to your housing search.
A good broker will know the city’s boroughs inside and out. They can also assimilate your preferences and find a place you’ll fancy. This includes scoping out off-market listings, which are known only to brokers.
Furthermore, a knowledgeable broker can save you thousands of dollars by negotiating with the seller’s agent. Negotiation isn’t a game you want to play alone; let an expert do it for you.
Finding listings online
If you want to explore your options, heading online is a fine choice. There are many resources that’ll clue you in on available listings, such as Zillow, StreetEasy and New York Times Real Estate. On many websites, you can browse apartments in list and map format.
Choosing a neighborhood in New York City
New York City is composed of five boroughs, or districts, each with its own unique vibe and price range.
1. The Bronx
Median list price per square foot: $274
Median list price: $329,000
The Bronx is the most affordable of the five boroughs. Though you’ll find limited transportation options here, you won’t run out of interesting places to explore. Not only will you enjoy big draws like the New York Botanical Garden and Zoo, you’ll also feast on the borough’s great food and culture.
Median list price per square foot: $759
Median list price: $799,000
In recent years, Brooklyn has become one of the most expensive places to live in the US. Unsurprisingly, it has the second-highest median housing price of the five boroughs.
If you can afford a place here, you’ll move to the borough that many New Yorkers consider the “cool” one. It’s overflowing with art and culture, its parks are expansive and it boasts a wealth of acclaimed nightlife.
Median list price per square foot: $1,801
Median list price: $1,980,000
Manhattan is the most expensive borough by far. That said, it’s where many people dream of living, as it’s widely considered the heart of the city. You’ll find the hustle and bustle New York City is known for, as well as world-class dining and entertainment. If you want to be near the city’s most famous places — think Times Square, Central Park, Broadway and more — Manhattan is where you want to be.
Median list price per square foot: $497
Median list price: $555,000
Queens is the most ethnically diverse borough, so it’s the quintessential melting pot. It’s also the largest borough, so consider buying a car if you want to live there. Without one, many residents say it takes a really long time to get around.
5. Staten Island
Median list price per square foot: $371
Median list price: $549,000
Staten Island is a suburban area, and many New Yorkers say it feels disconnected from the rest of the city. You’ll find spacious housing (good for raising a family, perhaps) and, surprisingly, lots of open parking spaces.
What to consider when choosing an apartment
Everyone has their own criteria when buying an apartment. If you need help narrowing your choices, here are a few key factors most buyers consider.
Do you want a co-op or condo?
Consider a co-op if you want to pay less for your apartment, you crave more selection and you’re okay with an older building and potentially a more involved board of directors.
Consider a condo if you’re okay with paying more, you want a newer building and you prefer less involvement from your board of directors.
Where do you want to live?
Research boroughs and neighborhoods so you know what to expect. See how much apartments typically cost in each area, and whether certain areas can better help you achieve your personal goals.
Before settling on an apartment, walk around the neighborhood and see how you feel being there. Also, consider factors such as proximity to key areas in New York City, how far your work commute will be and what kind of lifestyle you might lead in the area.
How much do you want to pay?
Price is a key factor for virtually every apartment hunter. Analyze your income and monthly expenses to see how much housing you can afford. Furthermore, contact your lender or mortgage broker to see what mortgage you may qualify for.
Use filters on real estate websites to narrow listings by price. Also, ask your broker to recommend neighborhoods that fit your budget and other requirements.
What are you looking for in an apartment building?
Each building has its pros and cons. Make a list of amenities you’d prefer and which you could live without. These might include:
- Elevator availability. How many elevators does the building have? Are there enough for several residents, especially during high-traffic hours?
- Sublets. If you need to vacate your apartment, can you sublet it to someone else?
- Board of directors. Will you get along with your board? Do you have a vision for your apartment, and if so, how receptive will the board be?
- Pet policy. Can you bring a dog, cat or other pet into the building? What are the rules on how many pets and what kind of pets you can have?
- Doorman. Is having a doorman important to you, perhaps for safety or collecting packages?
How much New York City apartments cost
If cost is your primary concern, consider a co-op. The median price is $795,000. Condos go for more, at a median price of around $1.4 million.
What if my budget is tight?
You’re not automatically out of luck if price is a big restriction. Try looking in these nine neighborhoods where the median selling price is less than $700,000.
|Neighborhood||Median selling price|
|Northeast Flatbush, Brooklyn||$234,000|
|Rego Park, Queens||$273,463|
|Jackson Heights, Queens||$335,000|
|Sheepshead Bay, Brooklyn||$337,500|
|Forest Hills, Queens||$382,500|
|Bay Ridge, Brooklyn||$417,500|
|Murray Hill, Manhattan||$687,500|
Other charges you should be prepared for
- Down payment. Though your down payment goes towards your mortgage, expect to pay at least 20% of the apartment’s cost.
- Taxes. As you might expect, Uncle Sam will want his cut. Most notable is the 1% mansion tax if your apartment costs over $1 million.
- Broker fees. Hiring a real estate agent to show you around will cost you, though there are some ways to avoid paying broker fees.
- Other closing costs. Bank fees might cost $350 to $750, and the appraisal fee could cost $300 to $1,500. Expect to pay hundreds or thousands more in other fees.
- Monthly charges for your apartment building. On average, New Yorkers pay $1,500 a month in building maintenance fees.
How to pay for your apartment
Unless you have the cash to buy your apartment in full, you’ll probably need a mortgage for your new apartment. Considering the average costs of a New York City apartment can get quite steep, saving up for your new apartment can be quite a feat.
Before starting your apartment search, get a preapproval letter from your lender or mortgage broker. This gives you an estimate of the size of mortgage you’re authorized for and lets a seller know you’re serious.
After you’ve submitted an offer on an apartment and it’s accepted, get a commitment letter from your lender or mortgage broker. This stipulates the mortgage you qualify for, when you’ll receive it by and what interest rate you’ll receive.
Don’t settle for the first lender or mortgage broker you come across — compare them to find the best rate.
What’s next on your apartment hunt
At this point, you know quite a bit about finding a New York City apartment. You don’t have to jump head-first into the process. Take baby steps and go all-in when you’re ready.
Here are a few things you can do to prepare.
- Get a general sense of whether you want a co-op or condo.
- Look into the city’s boroughs and consider which ones you might enjoy living in.
- Define your budget.
- Go online and find a few apartments you like.
After you’ve done this, the next step is to contact a broker. Since you have an idea of what you’re looking for, you can give your broker more information to work with. They, in turn, will help you find your dream apartment.
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