New York has been called the world’s capital and is hotter than ever, especially now Obama is in power and America is cool again. We Brits couldn’t get enough of it when interest rates were favourable, but with a slumping pound and a fall in our own housing market we now get a lot less for our pennies. But all is not lost and if you look carefully there are a few surprising bargains out there.
The Property Market
New York is the benchmark by which all other cities are measured. London may claim to be the coolest, Paris arguably the most romantic, Rome the most historic, but New York is indisputably the most iconic. Count them off: the Statue of Liberty, The Empire State and Chrysler buildings, Wall Street; Broadway- and those are simply the monuments for which the Big Apple is best known.
The real heart of New York is in its energy and the buzz of the people. New Yorkers are fast talking, passionate and wise cracking who care little for the fact that you may not be quite up-to-speed with their pace of life. It is sink or swim time in “the city that never sleeps” and to survive you have to ride the wave. Granted, it’s not for the faint-hearted but if you like living life a little bit on the edge you’ll be swept away by New York.
Despite the economic downturn across the pond, According to the New York Times, now is the time to buy. With the prices of property and mortgage rates at a low, and the cities financial workers out of pocket, many estate agents are claiming it is now a buyers market. However, whether house prices in New York are set to fall further remains to be seen.
“Most Britons buying for a secondary residence tend to focus on the midtown (east and west) markets, buildings like the Time Warner Center, One Beacon Court, Trump International, 15 Central Park West, and The Plaza are very popular,” says Dan Levy of NYC based www.cityrealty.com. “Younger buyers tend to gravitate downtown to Chelsea, The Village, Soho, Nolita, and the west and east village. There are a number of good investment areas: anything on Central Park (or, more importantly, with protected park views) is likely to be a very good investment, though the purchase price is going to reflect that, midtown west, Inwood and the Financial District are likely to be good bets. Harlem and parts of Brooklyn are riskier, but potentially offer greater upside. It is a classic risk/reward consideration.”
The Statue Of Liberty. Buying Abroad: New York
In such an expensive city, renting is often the only way many can afford to live in NYC. “New York is for the most part a city of renters, about 65% of residents rent,” says Levy. “The reasons why include the high price of purchasing and NYC’s transitory nature. For foreigners, who may expect to be in New York for only a year or two, it is usually wiser (and easier) to rent as opposed to purchase.”
New York is not only about business, though. There’s a huge artistic buzz about the city, with many “creatives” living across the East River from Manhattan in Brooklyn. Here, property prices are a fraction of what you’ll pay in Manhattan. It’s wholly possible to buy an apartment in a “co-op” for around $200,000 (£105,000).
“Although unheard of in the UK, co-op’s are popular in NYC,” says Bristow. “A co-op is a residential property owned and managed by a corporation. Buying an apartment in a co-op means you are purchasing shares in a corporation rather than actual real estate. The purchase gives you the exclusive right to live in a given unit to which those shares are assigned and sell them on in due course.”
Purchasing in a co-op (be aware non-national restrictions vary from building to building and often are dependent upon visa status) is often the only way to get a foot on New York City’s high-priced property ladder, and despite an unprecedented series of interest rate rises wrought to cool the market, it shows only moderate sign of slowing.
“The market is generally strong, though not nearly as active as this time last year,” says Levy. “Good properties (i.e. well located, appropriately priced apartments in good condition in desirable buildings) are selling and often selling rather quickly. However, mediocre apartments in secondary locations (or apartments that are simply mispriced) are not selling well, particularly in the middle segments of the market.”
Buyer’s Guide
“As the property market in NYC is constantly changing, buyers are encouraged to enlist the services of a real estate broker, or agent, who will be in the best position to find properties as they become available,” says Roy Bristow, marketing director of leading property website www.newskys.co.uk. “In most cases, there is no additional cost to the buyer in using a broker, as they are paid a commission from the seller.”
Before you visit any apartments, unless you intend to pay cash, it is important that you are pre-qualified with a mortgage lender that regularly lends in New York City. Pre-qualification allows you to accurately determine how much you have to spend, provides a stronger offer potential over other buyers and speeds up the closing process once the offer has been accepted.
Once you have found an apartment you would like to purchase, your agent will make an offer on your behalf. The seller’s agent will likely offer a counter-bid, beginning the negotiations. At this point is recommended that the buyer enlists the services of a seasoned NYC real estate attorney.
Once both parties have agreed upon an acceptable offer, the seller’s attorney will draw up a contract for the buyers attorney, and the buyer will in turn sign said contract and submit it for execution. The contract may be contingent upon buyer approval from the building’s board of directors.
Gaining approval from the building’s board of directors involves submitting a buyer’s application providing professional, personal and financial verification, and may also involve attending an interview.
Yellow Cabs. Buying Abroad: New York
Approximately two weeks after the buyer receives board approval, a date for closing will need to be set by the managing agents, based upon the schedules of both lawyers and the banking institution.
The closing process entails a final inspection of the real estate, the completion of pending financial transactions, and the creation of an official deed/title for your property. Buyers can expect to pay at least 20-25% for a deposit, more if buying a co-op apartment (see distinction below), as well as 2-3% for legal fees and taxes.
In NYC, different property terms are used to those we employ in Britain. For example: condominium or “condo”, cooperative or “co-op”, and townhouses.
When a buyer purchases a condo they own the apartment plus a percentage of the common areas of the building. The purchaser takes the title by deed, which is recorded in the county clerks’ office.
A co-op is a residential property owned and managed by a corporation and buying an apartment in a co-op means you are purchasing shares in a corporation rather than actual real estate. The purchase gives you the exclusive right to live in a given unit to which those shares are assigned.
Townhouses are freestanding two-five storey buildings traditionally occupied by families or well-established individuals who prefer the more private and comfortable living environment.
