In the US, a typical starter home is priced between $150,000 and $250,000. Needless to say, in New York City, it’s different–especially in Manhattan, where the median sales price just set an all-time high at $1,215,000. For New Yorkers, the definition of “starter home” means that you had the savings and forethought to get into the game at all. Unlike most places, NYC starter homes aren’t occupied for two to three years. More likely, we’re talking seven and up. This is a function of a tight market, high closing costs, and sheer expense of real estate. Closing costs alone can amount to 10% of your sale, which means that your starter home will need to appreciate by at least that–plus the non-deductible portion of your property taxes and maintenance. All in all, it’s just a different ball game, so here are four things to look for:
- Low Carrying Costs. You need to factor in not only your mortgage payment, but property taxes, maintenance fees, and building common charges. Before you buy, look at your building’s reserves and their maintenance history to see how often–and how much–it’s risen. You’re looking for stability, and if you’re stretching to make your purchase work in the first place, a hefty special assessment could be devastating.
- Look for Up-and-Coming Locations. For proof that this strategy works, just look at what Brooklyn’s done over the past decade. While you may be able to find a deal in the heart of Manhattan, the likelihood that it’s going to substantially appreciate in order for you to move on from the starter home is another story. Take a look at our blog post Brooklyn’s Quietest Neighborhoods. You’ll find some very reasonable prices.
- Tax Abatements. When you think starter apartment, you often don’t think brand new. Yet you can save bundles on property taxes with tax abatements offered by new developers–and they can last up to 20 years.
- Renovation Potential. Unless you’re super handy, a fixer-upper may not be your first choice, but if funds are limited, it may be your only choice to enter this elite market. Wherever you buy, budgeting regular interior upgrades over time will pay off. Bathroom remodels, kitchen remodels, and, if your building allows it, new windows, will offer you the best bang for your buck.
If you’re considering a starter home, give the Stanton Hoch Team a call. As top sellers in the #1 residential firm in Manhattan, we have access to the widest range of options available.