In 2007, the median household income in New York City was $48,631, according to the American Community Survey released last week by the Census Bureau. This, of course, means that about half the city’s households are getting by on less than $50,000 annually, including paying astronomical fees to rent or buy an apartment. Herewith are three fictional scenarios!
First, the recent college graduate, fresh to New York and eager to start his or her successful career in business or media or law or medicine. Opportunities abound and the future looks bright! And then it comes time to find a place to live. According to an August report from brokerage The Real Estate Group New York, the average monthly rent for a Manhattan studio apartment in a doorman building is $2,594. The total annual rent is $31,128, roughly 64 percent of the city’s median household income, leaving only $17,503 left over to pay taxes, buy food, pay bills, and save money.
So what about buying, then? The average sales price for a Manhattan studio condo was $634,336 in the second quarter of 2008, and the average sales price for Brooklyn condos wasn’t much lower at $601,280, according to second-quarter figures from appraiser Miller Samuel. The cost of a 10 percent down payment would exceed $60,000 in both cases, at least $10,000 more than the median household income for a New York City resident (and that’s assuming a condo—co-ops normally demand much more than 10 percent down).
One of the easiest ways to save money is to share living space, and this gives young cohabitating couples more options when it comes to housing. Let’s assume, for the sake of argument, that two full-time working adults would double the median household income from $48,631 to $97,262. In August, the average monthly rent for a one-bedroom apartment in a doorman building was $3,772. Annual rent would be just above $45,000, so the young couple would still have about $50,000 left to cover living expenses and perhaps save money for (yikes!) a baby.
Buying an apartment in Manhattan might prove to be a little too costly, however, with average Manhattan sales prices for one-bedroom condos at $949,513 in the second quarter. A 10 percent down payment comes to nearly $95,000, leaving little money to cover basic living expenses, but if the couple is adamant about buying an apartment, they would be wise to look into the Brooklyn co-op market, where average prices were only $332,250, and a 10 percent down payment (assuming a malleable board) would cost about $33,000.
Suppose this couple does have a child. More space, anyone?
The climb from a one-bedroom to a two-bedroom apartment is steep. The average monthly rent for a two-bedroom apartment in a doorman building in Manhattan is $5,750; average annual rent is $69,000.
Children take up time, and children are expensive. If parents opt to raise the child themselves, it would likely require at least one parent to spend more time at home and less time working. Let’s assume that the household income drops to $72,947. On that level of income, renting a two-bedroom apartment in Manhattan is difficult, and sales prices for two-bedroom apartments are also prohibitively expensive. A 10 percent down payment on an average two-bedroom condo in Manhattan would cost roughly $220,000.
Suppose you find a decent and relatively cheap place to live. Where do you send your child to school? New York City public schools are inconsistent, and almost entirely dependent on the neighborhood. Let’s assume your school district isn’t the greatest and you’d like to send your son or daughter to private school. Tuition at a prestigious all-girls school like Brearly starts at $32,550 annually and goes up after the fourth grade; intellectual rent at all-boys St. Bernard’s is $31,760.
New Jersey beckons.
ohaydock@observer.com
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