How A Person With a Five-Figure Income Buys an Apartment in New York City


When The New York Times ran a story in late June on income-restricted housing, I almost didn’t read it. After a six-month apartment search on a New-York-broke budget, I was something of an expert on the ins and outs of different types of buildings. But I had just curled up with a mug of coffee at my parents’ suburban kitchen table, their print Times arrayed before me. I’d skimmed most of the story when my eyes arrived here:

“As long as they are financially sound and they are well priced, they will fly off the shelves,” said Karen D. Shenker of the Corcoran Group. Last month, she listed a renovated three-bedroom in Harlem for $300,000 with income caps ranging from $70,500 for one person to $108,750 for five. The first open house drew more than 100 people and multiple bids. Within a week, the apartment had an accepted offer for more than 10 percent above the asking price.

What the broker didn’t mention, is that before that apartment’s sellers accepted a bid north of $330,000, they had accepted, and then sketchily reneged on, a slightly lower one—mine.

But that’s just another day in the New York City real estate market where, even if you are a relatively lucky twenty-something without student debt who has been living with a relative for almost three years to save money, and with parents willing and able to help some (hi guys!), finding an apartment—to rent or buy—without a six-figure salary is damn near impossible. It’s been well-reported that the city is a foreign millionaire’s playground, with luxury apartments sitting vacant most of the year and “affordable” apartments languishing, because official definitions of “affordable” are ridiculous. In the New York Times version of reality, families are “priced out” of Brooklyn with half-million dollar budgets—and every new graduate with big dreams has either rich parents or a trust fund. At least, that’s how the millennials featured in Joyce Cohen’s “The Hunt” column each weekend net their high ceilings and picture windows.

In the case of that income-restricted apartment, whoever bought it made a “middle-income” living yet somehow had more than $330,000 in cash at the ready. That’s all to say, the relationship between the money it takes to own real estate in New York and real life is tenuous, at best.

Still, nearly nine months after starting a search, I did just move into my very own little apartment in a big, convenient doorman (!!!) building in Harlem. But it only worked out because I took advantage of a little-known co-op quirk: the sponsor unit. Those are apartments being sold for the first time since going co-op—and those sales don’t require board approval.

Here’s the thing: In this seller’s market, condos are snapped up by cash-paying investors to rent out at inflated prices, so people that actually want to live in homes they own are best left searching for a co-op, which have rules and fees that discourage subletting. But living in a co-op requires getting approval from its board, and it would have been virtually impossible as a journalist on a non-New York Times salary to gain an approval.

In New York, people only want you to be their neighbor if your “debt-to-income ratio”—the proportion of your income that goes toward paying off debts—is 35 percent at most (many require more like 25 percent). Debt includes your hypothetical mortgage. So, spitballing, someone who makes $50,000 can carry a maximum of $17,500 in debt annually, which works out to a $1,458 monthly payment. Say you want to buy a $425,000 studio, putting down the standard 20 percent, or $85,000, because you magically have that much cash. That leaves you with a $340,000 mortgage. Lets say you lock in a 4.3 percent fixed interest rate for 30 years, bringing your mortgage payment to more than $1,600. You’re already above the $1,458 that boards will accept, and that’s before the monthly maintenance is added. And any student loans and credit card debt. You could make a high enough down payment to rejigger the numbers and hit the sweet spot, but what twenty-something making five figures has that kind of money?

There were few properties in yuppy Manhattan and Brooklyn—I wanted to live near All The Things—that even put me within range of an acceptable debt-to-income ratio, and most of them were high-floor walk-ups the size of walk-in closets. And in Brooklyn, they all spurred bidding wars. I was the highest bidder, but not the selected buyer, on a couple studio apartments in Brooklyn; even offering more money doesn’t outweigh the draw of someone who makes more money—or who can magically pay all cash.

Which brings us back to that income restricted, or HDFC, apartment in Harlem. Its Streeteasy photos looked beyond beautiful—all exposed brick, wood moldings and decorative fireplaces—huge, and within my budget (with a roommate). I had my agent put in an offer, the asking price, just for laughs. But a day or so later, my agent called. “The seller Googled you and liked something she saw,” she told me. “They want a best and final offer from you today, and they’ll cancel this weekend’s open house. I like you fine and all,” she continued, “but this kind of thing never happens.” Most of my work the past few years has been for my job at the Columbia Journalism Review; maybe the owner had a thing for media criticism?

I made a higher offer, which included about a 30 percent down payment, some from savings I’d squirreled away, and some from my parents. The seller accepted, and thus began the scramble to line up a mortgage broker, attorney, and to compile the endless documents co-op boards require. I started reading over the contract, and my new lawyer drafted a buyer’s rider, basically a contract addendum aimed at protecting my interests. Then, silence. Next I heard, the sellers reneged on their acceptance, which, FYI, is bad form, and bad karma, even if it isn’t illegal. My agent guessed they found an all-cash buyer, but we didn’t know that they jumped at a higher offer, despite accepting mine, until I read about it in The New York Times.

We didn’t know that they jumped at a higher offer…until I read about it in The New York Times.

My second choice during Dream Apartment Saga was that sponsor unit. It had been on the market for a while, listed at $285,000 and the sponsor was eager to offload it. This time, when my $280,000, with more than a third down, was accepted, everything was straightforward. I got to skip the whole board approval headache, and I moved in last month. The building is big and clean and a half block from the subway, and it already feels like home.


Kira Goldenberg is the web editor at the Columbia Journalism Review.

Photo: Sarah Ackerman



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