It’s no secret that buying real estate in Manhattan has its set of rules. But if you don’t live in the city or you’ve never looked into buying property here, you might ask the question, “How different can it be?” From what you can live in, to how much you should expect to pay, the differences in Manhattan real estate as compared to other major cities is significant. Read on for a more detailed explanation.
The majority of Manhattan’s inventory consists of co-op and condo apartment buildings and multi-family dwellings. Single homes don’t exist in the concrete jungle, so even if you’re in a financial position to own a townhouse, you’ll have neighbors on at least one side.
Most of the city’s inventory is comprised of apartments rather than houses, whereas, in other cities, you’ll find more of a combination of housing types. Most people who move to Manhattan or live here have already accepted that they’ll be living in an apartment, whether they rent or own.
Real estate costs in Manhattan are at an all-time high, and the borough is regularly included in lists of the most expensive areas of the country to buy a home. Even though cities like Los Angeles, San Diego, and San Francisco have higher median prices, the properties in these areas have a lower cost per square foot, meaning you’ll pay more for less space in Manhattan.
According to Trulia, the average price per square foot for New York, NY was $1,418 in July 2015, which is five percent higher than the same time last year.
Let’s talk more about space. In addition to smaller living quarters, you’ll also be dwelling closer to your neighbors in Manhattan than in other high-priced locales. The city boasts 66,940 people per square mile, making those high-priced apartment buildings a little too close for comfort considering the asking prices.
Minimum down payment
Since the majority of Manhattan’s housing inventory remains in cooperative buildings, you’ll need to come up with a minimum of 20 to 25 percent down, and in some instances, as much as 50 percent down, depending on the co-op. In other areas of the country, as long as you can meet the necessary requirements to secure a mortgage, you can qualify to purchase a home. But in Manhattan, most co-ops are vigilant about shareholders and their histories, so they must meet a long list of qualifications to be considered as potential residents, and a minimum down payment is at the top of that list.
Beyond the higher down payment, residuals after closing are a big part of the package when buying into a co-op. Although most mortgage companies wish to see two to four months principal, interest, taxes, and insurance in the bank after closing, co-ops require a certain number of months of principal, interest, maintenance, and insurance in the bank. Most Manhattan co-ops usually want to see a minimum of six months, and sometimes at least one to two years in an account after you pay the down payment and closing costs. So coming up with the 20 percent down money isn’t enough to guarantee your spot in a co-op building, but rather, you’ll need residuals after you close to ensure your ability to pay expenses if you lose your job.
What’s more, since a plethora of real estate transactions in Manhattan requires jumbo loans, buyers purchasing apartments over the conventional limit should be prepared to have higher reserves as well.
More than one offer on the table is a common occurrence in the Manhattan real estate world. It’s also not unheard of for a seller to have several offers over asking price. When this scenario happens, the seller must choose the most qualified candidate on paper, and often goes with an all-cash offer, if available.