Millennials and home buying in NYC seems like an oxymoron. With the average price of a Manhattan condo hovering around the $2 million mark and other boroughs such as The Bronx, Brooklyn and Queens seeing high increases over the last two years, having enough for a downpayment seems almost impossible. Sure, there are those who have parents with deep pockets or who are banking big Wall St checks but for the majority, with wages stagnating and student loans increasing, being locked in the vicious cycle of renting seems to be the norm. Rents are so high that, according to Trulia’s latest housing report, many millennials in 2018 will eschew New York on mass, in search for more affordable housing in the Mid-West and the South, in states such as Texas, Ohio, Tennessee, Wisconsin and Michigan.
Outside the pricey New York market, though Millennials are buying in New Jersey, Upstate NY, Westchester and even in Pennsylvania where home prices are significantly less. Some are choosing to commute into the city, others are working remotely and others are finding less high paying jobs closer to home. One thing that most Millennials appear to have in common is that they don’t want to put sweat equity into their homes to build value. They want houses that are already done. That means a boom in fix and flips in the outer boroughs and neighboring states. According to Inc., 68 percent of Millennials plan to sell their starter home, keeping it on average for six years.
While popular thinking seems to imply that Millennials can’t wait to leave their suburban upbringing and move into the city, the hard facts contradict this. Inc states that half of Millennials live in the suburbs with only 25 percent in urban areas nationally.
For Millennials without trust funds who wish to buy properties in New York the chance finding enough cash for a downpayment seems grim. “That’s the differential between the renter and the buyer: the down payment,” Miller Samuel appraiser Jonathan Miller told brickunderground.com. “Millennials have been subjected to static wage growth until very recently.”
With New York’s real estate market slowing, negotiating lower down payments, such as 10 percent instead of the usual 20 percent could be an option, along with state programs such as SONYMA loans which may allow qualified buyers to put as little as 3 percent down (if you make under $98,000 are are buying a place for under $665,000).
The reality of buying a property in NYC means that many Millennials may have to consider living in areas they never would have rented in, in order get a foothold on the property ladder. Co-ops in the outer boroughs of Brooklyn and Queens may have a Millennial’s name written on them. Sure, it may not be a fashionable and funky Crown Heights brownstone but it’s a chance to build equity and one day move on to loftier climbs. And in New York, buying right could reap huge rewards particularly if home improvements are in a Millennial’s wheelhouse.
“A lot of younger buyers I talk to want to be flexible and nimble,” Ace Watanasuparp of Citizens Bank told Brick Underground. “They want home ownership, but they want to be in a place where they can re-sell quickly if they need to. So they think about what other young buyers are looking for if they want to re-sell.”
But before they sell, they have to figure out a way to buy.