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What price you can expect to pay for a single family home in NYC

Will Rogers Real Estate Associate Broker Fenwick Keats Real Estate
What price you can expect to pay for a single family home in NYC

Everyone dreams of owning a piece of the Big Apple. Really big dreamers aspire to own a single family home, also known as a townhouse or brownstone. Prices vary drastically depending on a number of factors starting with location and condition. Here are some things to consider when deciding to buy a single family home in New York City.


Do

Do start with deciding which borough

New York City has single family homes in all five boroughs. Manhattan has the fewest number of single families and yet they cost the most, typical supply and demand economics. At the end of 2013 the average cost of a 1-3 family building in Manhattan was $5,543,000. The other 4 four boroughs were significantly less, with Brooklyn homes selling on average for $686,000, Queens for $541,000, Staten Island for $443,000 and the Bronx for $393,000. Prices within each borough also vary drastically depending on the neighborhood. Using Manhattan as an example, prices range from as low as $500,000 in upper Manhattan to $50,000,000 for Upper East Side homes over 40 feet wide. One extreme sale was over $100,000,000 and set a record in early 2014.

Do choose uptown or downtown

As a rule of thumb, your money goes farther the further you go uptown in Manhattan. Prices are moving up everywhere in Manhattan with downtown leading the way. If you do not want to compete with the celebrities and finance moguls for downtown properties, head uptown for more diversity and better prices. Upper Manhattan’s renaissance continues and while your money won’t go as far as it would have 10-20 years ago, there is still a solid selection of townhomes for more reasonable prices, some under $1,000,000. Harlem to Inwood is full of beautiful single family homes, many waiting your restorative touch.

Do decide to renovate or buy move in ready

Obviously prices will be higher the better the condition of the home. Average renovation costs are between $150 - $300 per square foot with some as high as $500. It’s a great thing to be able to renovate and put your mark on a home, but also recognize the effort involved. Ideally you would renovate before moving in, but that may not be realistic. Renovators beware: It’s very taxing to live in the home while work is being done. If your budget calls for a fixer upper, prepare yourself for a major project but know the payoff of getting exactly what you want may be more than worth it.

Do strike a balance between indoor vs outdoor space

Lot sizes in New York average 15-25 feet wide and 100 feet deep. The larger the interior footprint the smaller the outdoor space is. Many buildings had extensions added over the years to increase living space leaving little to no backyards. Even fewer townhouses are set back from the street allowing for front gardens. As a result, townhomes with significant front and back outdoor spaces garner a premium. So if backyard parties are a must, be prepared to pay extra.

Do more with less

Given the physical limits a city lot affords you, there are creative ways to expand both indoor and outdoor living space in townhomes. Roof decks are a common way to add outdoor space. The cost is usually minimal and getting city approval is not herculean as compared to other changes. A current trend for increasing interior space is to go down. Owners are now digging out cellar spaces for recreation rooms, screening rooms and home gyms.


Don't

Do not go it alone

It is very important to partner with an experienced real estate professional with knowledge of the New York City townhouse market. This is a significant investment so having the right resources to guide you through the process is paramount. You would seek out a professional when making financial investment decisions and this is no different. Know what you are buying as this may end up being one of your biggest assets in your personal portfolio.

Do not assume the building can not be expanded

An important measurement with buildings is the floor area ratio (FAR). The FAR ratio is generated by dividing the building area by the parcel area to determine how much can be built on the lot. Many townhouses have unused FAR that allows expansion. Buyers can expect to pay a premium for unused FAR when renovations to enlarge the home are planned.

Do not forget to budget for real estate taxes and other expenses

Property tax is another significant cost when owning a single family home. Every year the NYC Council sets the tax rate for different classes of property. For 2014 the tax rate is 19.191% for Class 1, which is most residential properties. Homeowners can determine their property taxes by applying this percentage to the home’s taxable assessed value. Other expenses include water and sewer, fuel, utilities, insurance and repairs and maintenance.

Do not shy away from landmarked buildings or neighborhoods

Over 30% of Manhattan is in a protected or landmarked neighborhood. Values tend to increase once an area is classified as landmarked. The downside is it proves more difficult and costly to renovate and make changes to buildings with this designation. Currently there is a debate over whether to designate Bedford Stuyvesant in Brooklyn as a landmarked area. The neighborhood is rich with stately neo-Grecs and Romanesque Revival brownstones. Now that the area is gentrifying there is a lot of pressure to preserve this slice of history from developers who may not respect the architectural integrity of the area. Bedford Stuyvesant is one area to consider with a smaller budget. The appreciation potential is great so in the long-run this is a good bet.

Do not rule out multi-family buildings

Most of the townhouse buildings were originally built as single family homes. Over the years many have been sub-divided into multiple units for rental income purposes. The current trend is for buyers to renovate and revert these back into single family homes. Just be aware when buying a multifamily building with rent controlled or stabilized tenants in place. It is very difficult, costly and sometimes impossible to relocate these tenants outside the building. As a result buildings with these tenants in place are less expensive. While initially this may seem attractive make sure you understand exactly what you are buying when the building is not delivered vacant.


Summary
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There is a lot to consider when buying a single family home in New York City. Costs vary greatly and this market segment continues to become more valuable. So if you have the desire and the budget jump in sooner rather than later. Like the other Will Rogers famously said, “Buy land - they ain’t making any more of the stuff.” In New York City, you could also say, “Buy a townhouse - they ain’t making any more of these either.”


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Will RogersReal Estate Associate Broker

Will is a Real Estate Associate Broker, REALTOR® with FENWICK KEATS Real Estate. He also serves as Sales Manager for the firm's downtown Village Office. He has helped many clients over the years with buying and selling apartments, townhomes a...

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