For first-time buyers, NYC is just as tough as you think

By Lucy Cohen Blatter | July 28, 2016 - 9:59AM 

Buying a home in New York City at any point in one's life is not for the faint of heart, between the sky-high prices, the co-op board requirements, and myriad taxes.  These challenges are part of the reason, in fact that the website you're reading now was founded. So we were hardly surprised to find our fair city ranking rather low on personal finance website WalletHub's Best and Worst Cities for First-Time Buyers.

To pinpoint the best housing markets for first-time buyers, WalletHub analysts looked at 300 cities of varying sizes and 62 large cities, and compared everything from housing affordability to violent crime.

"New York ranked as the eighth worst (293rd) city for first-time home buyers overall, and third worst (60th) among large cities, mostly due to its very low affordability and cost of living," says Jill Gonzalez, an analyst with WalletHub.

Here are the stats:

Buying a first home in New York (1=best; 150=average): 

  • 264th – Housing affordability
  • 285th – Cost of living
  • 272nd – Rent-to-price ratio
  • 222nd – Median home price appreciation
  • 190th – Violent crime rate
  • 236th – Total home energy cost 

In NYC (across all five boroughs), says Gonzalez, "the median house price is $509,040 and the median annual household income is just $52,737. Thus, the run-of-the-mill income represents only 10.4 percent of a house price."

The problem, she says, is that "most consumers will have a harder time obtaining a loan and saving for a down payment" with numbers like that.

Insuring the house is not cheap either, as average homeowners insurance (for one- to -four family homes) is $1,213 per year, she says.

But New Yorkers are nothing if not resilient, and we doubt these numbers will deter any of you from buying here and, instead, decamping to, say, Overland Park, Kansas or Lexington, Kentucky, which ranked first on the overall list and first for big cities, respectively. And to look on the bright side, we're better for first-time buyers than Miami and Oakland, California, which both scored lower than NYC. 

"The income-to-house-price ratio in Miami and Oakland are even more restrictive than in New York," explains Gonzalez. "In Miami the median house price is $329,935 with a median annual income of just $30,858, meaning that the income represents only 9.4 percent of the house price. In Oakland, the median house price is higher than in New York at $520,000, but the median annual income is just a couple of hundred dollars more at $52,962. Thus, in Oakland the income represents 10.2 percent of the median house price." 

And no matter how bad NYC seems on lists like this, it's still immensely popular for first and second and third-time buyers. "If NYC is so unbelievably awful (293 of 300) why is the population exploding and job growth at a record pace?" asks data expert Jonathan Miller, of appraisal firm Miller Samuel, who tracks the prices of homes through his quarterly market reports. (In the second quarter of 2016, he found the median home price in Manhattan to be $1.109 million, $659,000 in Brooklyn, and $465,000 in Queens, which seems to jibe with the WalletHub numbers.)


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