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We've been renting for 5 years and we love it here so I think its time to buy. Apartment hunting and it seems nearly every fairly spacious apartment here is $1.5MM+. $1.5MM seems like the starter apartment here...so my question is - what is the typical buyer of such apartments? Our household income is a bit over $385K, and we could come up with 15%-20% down (we're young professionals so we don't have substantial savings). A $1.5MM purchase on our household income seems like a stretch but it seems like many people spend a hair more on their homes here than the rest of the country. Of course, our mortgage broker thinks everything is fine and dandy, but I'm wondering what portion of income the typical person here spends on housing.
That was the rule of thumb my parents used when they bought way back in the 70's. Interest rates were a lot higher back then so you could probably get away with a higher ratio today.
At your income level you could probably stretch it a little further if you forgo other expensive luxuries like private school, expensive vacations, etc.
Research down payments and the closing costs if you're not familiar with buying in NYC so that you're not surprised. Honestly, you will pay in closing costs what many people across the country pay for the entire home. If the home is over $1MM, there is a "mansion" tax added as well, so the numbers add up quickly.
We bought a home a couple years ago but in Brooklyn. The seller was more difficult than any of the process since they were elderly/ill and often hospitalized, which slowed down the process but made them more negotiable.
If people love an apartment, sometimes they offer more than asking. We ran into that a few times when trying to make offers. It can be competitive.
A steady job that you've had for a while, good credit, etc are what matter.
Also look into what monthly fees are charged and what is covered by them.
In our going to open houses every weekend phase, we saw a lot of young couples with similar questions. You can look into FHA loans for lower deposits and even financed closing costs.
Good luck. Don't rush to buy if you don't think you'll be happy there in a few years.
What is your definition of spacious and which areas are you looking at? I have represented buyers purchasing huge 2 bedrooms and convertible 3s in the Upper West, Upper East, Murray Hill and Midtown areas starting at 1200+ sq feet asking a little over 1M. In contrast, I have helped clients buy in more sought-after neighborhoods that for the same space can go up to 2.5M. Or you can just buy a townhouse in Greenwich Village for 14.8M =). You'll have to also decide if you're considering both co-ops and condos or only one or the other? Condos are more expensive but usually are more laid back with restrictions, investor-friendly and newer construction.
-Andrew
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