Posted by Leonard Steinberg on July 23rd, 2013

The WALL STREET JOURNAL this morning addresses a concern of many: are first time homebuyers being excluded from the housing recovery? Manhattan has always been a tough place for first time homebuyers, yet depending on the expectations of these buyers, I find there is always an entry level option for them. Often this requires compromise, a concept many younger people simply don’t understand or want to accept in this high-entitlement world. First time buyers in Manhattan are often assisted by a gift or inheritance to help with the downpayment, and then there are those that actually make huge spending sacrifices to save up those dollars for the downpayment. First time buyers are not necessarily all struggling: a city like New York produces a strong contingency of rather well-t0-do first time buyers.

New York has always been, and probably always will be, expensive. But there are areas that are more affordable than others, even though they may be less popular. We recently sold a 3 bedroom apartment on the Upper East Side for just under $ 1m. A couple each earning $ 150k could afford to buy that. A studio in the same building just sold for $ 300k……which requires an income of about $ 100k/year to afford. Granted, buying real estate in New York is not cheap, but its a lot more achievable than most think. Passing muster with co-op boards is tougher. The bigger problem is that land costs have been driven so high that developers don’t have much option other than to develop very high end apartments. Right now I am seeing too much of the same thing. The volume of first time buyers who can afford these ultra luxurious properties is very, very small: developers need to identify projects that are profitable as well as affordable for a wider group of buyers. Not for charities sake, but for the sake of success. If everyone keeps doing the same thing for the same audience, we should be certain trouble looms around the corner.