Hfahmad, Home Buyer in Westbury, NY

Do you expect sale and/or rent prices for a 400 sq/ft studio in Yorkville to increase significantly over the next 5-7 years?

Asked by Hfahmad, Westbury, NY Thu Apr 26, 2012

I am looking to buy a studio in Yorkville (north of 80th, south of 96th, east of 3rd) this fall at $250,000 or less with 10% down. I have very good credit and my parents with excellent credit can co-sign a mortgage. I would like to find a sublet-friendly coop as I will most likely be living abroad at some point for a limited time (about two years). I have two concerns:

1. Will the construction of the 2nd Ave. subway cause a significant increase in the attractiveness of the area in the next 5-7 years?
2. Would a studio in this area, before the 2nd Ave. subway begins operations, be marketable at a rate that would cover mortgage and maintenance?

Thanks in advance for your advice!

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Hi Hfahmad:

I think that the question can be answered in various ways. First, the current studio prices in the city, and particularly the UES are a bit depressed as people with the funds and the very low mortgage rates are trying to buy 1 bedrooms. The most appreciation that you will acquire is buying something that needs renovation as these do not have any premiums at all and are the most depressed across Manhattan. Overall though, yes, we are expected to go back to a normal growth 1-3%/year in the shorter term vs. the longer term, but no one can predict its start.

Second, co-ops (which is what the price range you mention are) generally require 20% down minimum. You most likely will need to be able to cover the cost of the mortgage and maintenance alone meeting the co-ops DTI (debt to income ratio) requirements with out your parents help.

Third, yes, the 2nd Avenue subway will definitely boost values. I have clients that are specifically looking in that area for that reason.

Fourth, in general, at the current low interest rate environment and at least 20% down, you should be able to cover all mortgage and maintenance costs.

Who knows where the market will go, but my thought is that we are quite stable for 2 years now, I wouldn't expect the market to fall, and at the current rental rates and your mortgage rates, you should be able to cover any mortgage and maintenance with that 20% down.

Feel free to call when you have a chance, I have owned investment properties for years and would be happy to discuss with you. The current environment is ripe for folks looking to not only make their home their principal residence, but also a future investment.

Kelly Killian
Vice President
Bond New York
Cel 954-675-9915
0 votes Thank Flag Link Thu Apr 26, 2012
Studios always lag even one bedrooms, especially tiny ones like the ones you are contemplating. Stretch, go for a 1 bedroom, if you can. The people who will contemplate buying your dollhouse will not be DINKS but rather future singles fresh out of college asking the same question you are asking now in 5-10 years.

You are limiting your potential resale market.
0 votes Thank Flag Link Wed Jun 20, 2012
I see at least 2 issues there: sublet friendly coop and 10% down... you may be able to find a coop that allows 80% financinf or 75% and they would be most likely "regular" coops that require to live in the building for a number of years before subletting...Investor friendly coops that allow subletting usually do not allow financing or require a larger portion of downpayment. This is from my experience and I would be happy to hear other opinions.
0 votes Thank Flag Link Tue Jun 19, 2012
Prices are steadily rising, the market is on a comeback i would say yes, and buy now while the market is still a buyers market.
0 votes Thank Flag Link Sun May 13, 2012
Prices have for the most part stabilized in Manhattan. With that said it may still be difficult to find a studio for $250K or less and in a Coop building that will allow a 10% downpayment, not to mention a liberal sublet policy.

No Question the 2nd ave subway will allow for prices to increase but I don't know anyone who can give me an actual time frame for that appreciation. The term "increase significantly" would be somewhat subjective.

As for MTA being able to suggest appreciation, I would not look to them as any kind of oracle. Still, your timing may well be right. Good luck.
0 votes Thank Flag Link Mon Apr 30, 2012
Here is my professional opinion regarding your questions ~

-- The New York Times and MTA sources have said that apartment values near subway stations on the new T subway line should increase 10% to 20% upon completion of the subway.

Now, this number is only an estimate of the suppression in prices caused by the long walk to the subway in Yorkville, as well as sections of Lenox Hill. No one really knows what will happen, of course. But this will be the nicest, most modern subway line in all of New York, with beautiful stations, and a line that goes one train to Midtown--this has to count for something.

-- Currently many buyers and renters are turned off by the construction mess and noise. One owner in my building, who has a 2-bedroom apartment, has moved out and is renting elsewhere in Manhattan! In my opinion there are some great deals on the Upper East Side right now because of this reality. You are wise to buy now and take advantage of a temporary inconvenience.

--Renting a co-op is a plan that always carries risk. I know of a co-op on the Lower East Side that went from a relaxed rental policy to a very strict one, overnight, because the board determined this change was in the best interests of the building. Realize you ALWAYS take a chance if you plan on renting your co-op. I do also realize buildings go for years with a liberal renting policy...but the risk of not being allowed to rent is always there.

Also, not all co-op boards will approve parents buying with children. Before you fall in love with an apartment, investigate the board's policy on this matter. I know the Upper East Side well and I'd be happy to help you, so feel free to contact me.

Karla Harby
Licensed Real Estate Salesperson
Rutenberg Realty
New York, NY
212-688-1000x146
kharby@crrnyc.com
0 votes Thank Flag Link Mon Apr 30, 2012
Most co-ops require 20% or more down 1st of all+there aren't many banks that will give a loan w/ only 10% down in the city.its To volatile!
Prices should go up for sale+rentals
A rental should cover the mortgage/maint
Most co-ops require you to live there for atleast 2years b4 you are allowed to rent it and a lot of them only allow a rental only 2 of every 5years.
You will need to find an investor friendly co-op, there few +far between. But they do exist! You will probably pay more for the right to rent.
The 2nd ave subway will be a great draw when its done+will increse the value of properties east of 2nd ave for sure!
0 votes Thank Flag Link Fri Apr 27, 2012
Most co-ops require 20% or more down 1st of all+there aren't many banks that will give a loan w/ only 10% down in the city.its To volatile!
Prices should go up for sale+rentals
A rental should cover the mortgage/maint
Most co-ops require you to live there for atleast 2years b4 you are allowed to rent it and a lot of them only allow a rental only 2 of every 5years.
You will need to find an investor friendly co-op, there few +far between. But they do exist! You will probably pay more for the right to rent.
The 2nd ave subway will be a great draw when its done+will increse the value of properties east of 2nd ave for sure!
0 votes Thank Flag Link Thu Apr 26, 2012
The answer to your first question in my opinion is definitely yes, assuming they get it finished. The second part of it depends on what you find, but it is possible. Talk to a broker and let them show you several properties this way you can get a general idea on the numbers
0 votes Thank Flag Link Thu Apr 26, 2012
what's your email? i can send you some listings
or fee free to contact me at:

Régis Roumila | Senior Vice President & Managing Director

Nest Seekers I N T E R N A T I O N A L
Manhattan • LIC • Brooklyn • Miami • Hamptons • International
415 Madison Avenue - New York, NY 10017

C: 646-325-7173 D: 646-924-4389 F: 212-252-9347
Regis@nestseekers.com
0 votes Thank Flag Link Thu Apr 26, 2012
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