Table of Contents Show
It’s no secret that buying real estate in Manhattan has its rules. But if you don’t live in the city or have never looked into buying property here, you might ask, “How different can it be?”. From what you can live to how much you should expect to pay, the differences in Manhattan real estate compared to other major cities are significant. Read on for a more detailed explanation.
Inventory/OwnershipInventory/Ownership
Most 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 financially able to own a townhouse, you’ll have neighbors on at least one side.
Most of the city’s inventory comprises apartments rather than houses; 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 live in an apartment, whether they rent or own.
PricesPrices
Real estate costs in Manhattan are at an all-time high, and the borough is regularly included in lists of the country’s most expensive areas to buy a home. Even though cities like Los Angeles, San Diego, and San Francisco have higher median prices, these properties 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, five percent higher than last year.
SpaceSpace
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 too close for comfort, considering the asking prices.
Minimum down paymentMinimum down payment
Since most 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. You can qualify to purchase a home if you can meet the requirements to secure a mortgage in other areas of the country. 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 potential residents. A minimum down payment is at the top of that list.
Required assetsRequired assets
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 of principal, interest, taxes, and insurance in the bank after closing, co-ops require several months of principal, interest, maintenance, and insurance. Most Manhattan co-ops usually want to see a minimum of six months, 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 payment isn’t enough to guarantee your spot in a co-op building. You’ll need reserves after you close to ensure your ability to pay expenses if you lose your job.
A plethora of real estate transactions in Manhattan requires jumbo loans. Homebuyers purchasing apartments over the conventional limit should also be prepared to have higher reserves.
Bidding warsBidding wars
More than one offer is common in the Manhattan real estate world. It’s also not unheard of for a seller to have several offers over the asking price. When this scenario happens, the seller must choose the most qualified candidate on paper and often goes with an all-cash offer.