I thought this article might be of interest to many of you in light of all the "Is $250,000 rich?" discussions here...
What Is Middle-Class in Manhattan?
By AMY O’LEARY
DRIVE through almost any neighborhood around the country, and class divisions are as clear as the gate around one community or the grittiness of another. From the footprint of the house to the gleam on the car in the driveway, it is not hard to guess the economic status of the people who live there.
Even the landscape is carved up by class. From 15,000 feet up, you can stare down at subdivisions and tract houses, and America’s class lines will stare right back up at you.
Manhattan, however, is not like most places. Its 1.6 million residents hide in a forest of tall buildings, and even the city’s elite take the subway. Sure, there are obvious brand-name buildings and tony ZIP codes where the price of entry clearly demands a certain amount of wealth, but middle-class neighborhoods do not really exist in Manhattan — probably the only place in the United States where a $5.5 million condo with a teak closet and mother-of-pearl wall tile shares a block with a public housing project.
In TriBeCa, Karen Azeez feels squeezed. A fund-raising consultant, Ms. Azeez has lived in the city for more than 20 years. Her husband, a retired police sergeant, bought their one-bedroom apartment in the low $200,000 range in 1997.
“When we got here, I didn’t feel so out of place, I didn’t have this awareness of being middle-class,” she said. But in the last 5 or 10 years an array of high-rises brought “uberwealthy” neighbors, she said, the kind of people who discuss winter trips to St. Barts at the dog run, and buy $700 Moncler ski jackets for their children.
Even the local restaurants give Ms. Azeez the sense that she is now living as an economic minority in her own neighborhood.
“There’s McDonald’s, Mexican and Nobu,” she said, and nothing in between.
In a city like New York, where everything is superlative, who exactly is middle-class? What kind of salary are we talking about? Where does a middle-class person live? And could the relentless rise in real estate prices push the middle class to extinction?
“A lot of people are hanging on by the skin of their teeth,” said Cheryl King, an acting coach who lives and works in a combined apartment andperformance space that she rents out for screenings, video shoots and workshops to help offset her own high rent.
“My niece just bought a home in Atlanta for $85,000,” she said. “I almost spend that on rent and utilities in a year. To them, making $250,000 a year is wealthy. To us, it’s maybe the upper edge of middle-class.”
“It’s horrifying,” she added.
Her horror, of course, is Manhattan’s high cost of living, which has for decades shocked transplants from Kansas and elsewhere, and threatened natives with the specter of an economic apocalypse that will empty the city of all but a few hardy plutocrats.
And yet the middle class stubbornly hangs on, trading economic pain for the emotional gain of hot restaurants, the High Line and the feeling of being in the center of everything. The price tag for life’s basic necessities — everything from milk to haircuts to Lipitor to electricity, and especially housing — is more than twice the national average.
“It’s overwhelmingly housing — that’s the big distortion relative to other places,” said Frank Braconi, the chief economist in the New York City comptroller’s office. “Virtually everything costs more, but not to the degree that housing does.”
The average Manhattan apartment, at $3,973 a month, costs almost $2,800 more than the average rental nationwide. The average sale price of a home in Manhattan last year was $1.46 million, according to a recent Douglas Elliman report, while the average sale price for a new home in the United States was just under $230,000. The middle class makes up a smaller proportion of the population in New York than elsewhere in the nation. New Yorkers also live in a notably unequal place. Household incomes in Manhattan are about as evenly distributed as they are in Bolivia or Sierra Leone — the wealthiest fifth of Manhattanites make 40 times more than the lowest fifth, according to 2010 census data.
Ask people around the country, “Are you middle-class?” and the answer is likely to be yes. But ask the same question in Manhattan, and people often pause in confusion, unsure exactly what you mean.
There is no single, formal definition of class status in this country. Statisticians and demographers all use slightly different methods to divvy up the great American whole into quintiles and median ranges. Complicating things, most people like to think of themselves as middle-class. It feels good, after all, and more egalitarian than proclaiming yourself to be rich or poor. A $70,000 annual income is middle-class for a family of four, according to the median response in a recent Pew Research Center survey, and yet people at a wide range of income levels, including those making less than $30,000 and more than $100,000 a year, said they, too, belonged to the middle.
“You could still go into a bar in Manhattan and virtually everyone will tell you they’re middle-class,” said Daniel J. Walkowitz, an urban historian at New York University. “Housing has always been one of the ways the middle class has defined itself, by the ability to own your own home. But in New York, you didn’t have to own.”
There is no stigma, he said, to renting a place you can afford only because it is rent-regulated; such a situation is even considered enviable.
Without the clear badge of middle-class membership — a home mortgage — it is hard to say where a person fits on the class continuum. So let’s consider the definition of “middle-class” through five different lenses.
The Money You Make
We’ll start with an obvious marker: If the money you live on is coming from any kind of investment or dividend, you are probably not middle-class, according to Mr. Braconi.
If you live in Manhattan and you are making more than $790,000 a year, then congratulations, you are the 1 percent.
Most researchers define the middle class by calculating the median income for a place, and grouping people into certain percentages above or below the absolute middle.
By one measure, in cities like Houston or Phoenix — places considered by statisticians to be more typical of average United States incomes than New York — a solidly middle-class life can be had for wages that fall between $33,000 and $100,000 a year.
By the same formula — measuring by who sits in the middle of the income spectrum — Manhattan’s middle class exists somewhere between $45,000 and $134,000.
But if you are defining middle-class by lifestyle, to accommodate the cost of living in Manhattan, that salary would have to fall between $80,000 and $235,000. This means someone making $70,000 a year in other parts of the country would need to make $166,000 in Manhattan to enjoy the same purchasing power.
Using the rule of thumb that buyers should expect to spend two and a half times their annual salary on a home purchase, the properties in Manhattan that could be said to be middle-class would run between $200,000 and $588,000.
On the low end, the pickings are slim. The least expensive properties are mostly uptown, in neighborhoods like Yorkville, Washington Heights and Inwood. The most pleasing options in this range, however, are one-bedroom apartments not designed for children or families.
It is not surprising, then, that a family of four with an annual income of $68,700 or less qualifies to apply for the New York City Housing Authority’s public housing.
What You Do
“There’s no room for the earlier version of the middle class,” Mr. Walkowitz said. Firefighter, police officer, teacher and manufacturing worker all used to be professions that could lift a family into its ranks. But those kinds of jobs have long left people unable to keep up with soaring real estate prices.
A police officer with five years’ experience in New York makes about $69,000 a year. A teacher with the same number of years in the city’s public school system makes $64,000 to $75,000.
The shift toward a knowledge-based and service economy has created a new set of middle-class jobs, like graphic designer, publishing professional and health care administrator. Positions that would nudge a family into the upper class elsewhere — say, vice president or director of strategy — and professions like psychologist are solidly middle-class in Manhattan.
The same holds true for jobs in higher education, a growth sector for the city.
The average tenured university professor at New York University or Columbia makes more than $180,000 a year, according to a 2012 survey by the Chronicle of Higher Education. Sweetening the deal for those looking to buy, N.Y.U. has offered mortgage assistance and discounted loans, while qualified Columbia faculty are eligible for a subsidy of up to $40,000 a year. Some faculty members benefit from university housing that rents well below the market rate, in prime locations on the Upper West Side and in Greenwich Village.
Maya Tolstoy, an associate professor at Columbia and a marine geophysicist who studies seafloor earthquakes, lives with her 9-year-old son in a small two-bedroom apartment in a doorman building on Riverside Drive. Because her building is owned by Columbia, her rent, about $1,800 a month, is manageable on an associate professor’s salary, which averages about $125,000. A similar market-rate apartment on the Upper West Side costs about $6,000 a month, according to a monthly report compiled by MNS, a brokerage.
“I think it’s much tougher for people with my income to survive in Manhattan without subsidized housing,” she said. “I am very lucky to have it.”
Are Children the Last Straw?
One way to stay in Manhattan as a member of the middle class is to be in a relationship. Couples can split the cost of a one-bedroom apartment, along with utilities and takeout meals. But adding small roommates, especially the kind that do not contribute to rent, creates perhaps the single greatest obstacle to staying in the city.
Only 17 percent of Manhattan households have children, according to census data. That is almost half the national average, making little ones the ultimate deal-breaker for otherwise die-hard middle-class Manhattanites.
Not only do children strain the wallet as that one-bedroom becomes infeasible, but many middle-class families have little confidence in public education. Tuition fees at private schools can reach $40,000 a year. So families decamp to the suburbs or hope that their offspring will test well enough to get into the public school system’s gifted-and-talented program, which offers a more challenging education free of charge.
“The trauma of kindergarten I still have not forgotten,” said Ms. Tolstoy, who beyond hitting a jackpot of sorts with subsidized Columbia housing, struck gold again when her son was accepted into a gifted-and-talented program.
But to get her son that far, she found it necessary to hire a consultant, costing about $800 for two sessions.
When Did You Get Here?
More than 280,000 units — nearly half of Manhattan’s apartment stock — is rent-regulated in some fashion. These apartments are either godsends to those who occupy them, or daggers that twist in the hearts of everyone else, left to pay market rate or compete for the borough’s remaining vacancies — 2.8 percent of the housing stock, as measured in 2011. But 30 percent of the residents of rent-stabilized apartments moved in more than 20 years ago.
An intriguing definition of what helps a person gain entry to the Manhattan middle class was ventured by Jonathan Bowles, the executive director of the Center for an Urban Future, who issued an in-depth report in 2009 that examined the city’s changing class dynamics. “Understanding who is middle-class, in New York, but especially Manhattan, is all about when you got into the real estate market,” he said. “If you bought an apartment prior to 2000, or have long been in a rent-stabilized apartment, you could probably be a teacher in Manhattan and be solidly middle-class. But if you bought or started renting in a market-rate apartment over the last 5 or 10 years, you could probably be a management consultant and barely have any savings.”
Sabrina Dent was born and raised in Manhattan thinking she was middle-class. Ms. Dent grew up attending a private school on the Upper East Side. She did not realize what normal life was until she left Manhattan to attend a public university in Rhode Island, where she paid less in rent than her father had been paying for a 12-by-6-foot parking space in the city.
“That radically readjusted my barometer,” she said. Now Ms. Dent is a Web designer in Cork, Ireland, living a regular middle-class life, and unable to imagine why anyone would want to stick it out in Manhattan on a moderate income.
“The only artists I know now who are still in Manhattan,” she said, “either made it big and bought, or are still in the rent-controlled studios they landed in 1976, and will leave in a coffin.”
Values That Define You
People define class as much by association and culture as they do by raw numbers — a sense, more than anything, of baseline financial security garnished by an occasional luxury like a vacation, and a belief that things can get better through hard work and determination.
“Middle-class, to me, is having a pretty good job, enough money to pay bills and rent, and then a little extra,” said Desiree Gaitan, 29, a manager of social media for Shairporter, a tech start-up that arranges shared taxi rides to New York airports. She says she feels middle-class even though she makes about $40,000 a year (equivalent to about $17,900 a year in a more typical part of the country).
Ms. Gaitan stays afloat by shopping at thrift stores, picking up baby-sitting gigs when she can, and hanging onto a great deal: she pays $600 a month to share a rent-regulated two-bedroom apartment near Columbus Circle — a place her roommate’s parents found years ago.
“It’s tough,” she said. “I have a good work ethic, and I think I would like to stay as long as possible, as long as I’m enjoying my career. All of that is worth it at the end of the day, for some psychotic reason.”
Are They Dying Out?
“Manhattan has serious affordability problems,” said Mr. Braconi, the economist. In the last decade, the percentage of people who are paying “unaffordable rents” (defined as more than 30 percent of their income) has increased significantly, according to a report issued in September by the city’s comptroller.
If that trend continues, it will feed the perennial panic that Manhattan’s middle class is on the brink of extinction, no longer able to cope with the city’s prices and fast retreating to its natural habitat, the suburbs.
It is true that the middle class here is smaller than anywhere else in the country. It is true that price pressures from both real estate and the cost of living are not slowing down anytime soon. But it is also true that calamity has been forecast for over a century now.
“Soon, there will be no New Yorkers,” proclaimed the Sunday magazine of The New York Times in 1907, in an article that detailed how families making $1,000 to $3,000 a year — $24,000 to $72,000 a year in today’s dollars — were being pushed out because of increasing rents, and servants’ wages, as well as the crushing cost of ice and coal. Adjusted for inflation, laundry alone for a family cost $115 a week. A pound of chicken? $8.08. Rent, on the other hand, for a “small, middle-class flat in a decent, but unfashionable locality,” would seem to be a bargain in today’s market, at the price of $272 per room per month.
In 1968, New York magazine documented the mad scramble for affordable apartments in a cover article detailing the extreme lengths to which average people went to secure one. “Surgeons have postponed operations, housewives have gone back to work, hippies have cut their hair and families have destroyed their pets,” the magazine reported. “Little hope is held out for the middle-income ($15-20,000 a year) people, career girls who do not want roommates and couples with more than one drawer-sized infant.” Brownstones that had sold for $125,000 in 1958, according to the article, were selling 10 years later for twice that much (in today’s dollars, a jump from $827,000 to $1.65 million).
But members of the middle class remain, scattered among the elite and the growing numbers of the working poor, in that place where lucky deals and tiny kitchens converge, wondering, just as they did in 1910 and 1968, how long they’ll be able to stay put.
Ms. Azeez in TriBeCa is pondering the question. The only young people she sees moving in around her are often buoyed by parental support, given an apartment at graduation the way she was given a Seiko watch. As her own friends and neighbors age or die out, she wonders, “who is going to take our place?”
I am going to send this to my family. They live in LCOL areas and cannot understand why my H and I say we can't afford to buy a house, even though we make what is to them a very large sum of money. And we don't even live in Manhattan. We're in Westchester. We looked at moving to Manhattan but didn't think we could afford the rents there, let alone keep a car. It's crazy.
LOLOL. It's either not a home or it's not in Atlanta. /threadjack
Could it be an apartment? An apartment is a home! (But I'd also imagine she may be using "Atlanta" liberally)
The word apartment doesn't apply to what you mean anywhere except NYC.
Yeah, you can find a 1-bed condo here for <$100K. I keep thinking back to our discussion last week, though, that 4-bedroom houses in good neighborhoods are $750K. Sigh.
Post by runblondie26 on Jan 19, 2013 12:54:44 GMT -5
There are so many half finished McMansion sub-divisions OTP, houses are dirt cheap here. Even ITP, there's plenty of 85k real estate to be had depending on the neighborhood. I'm sure that house isn't in Druid Hills.
My dad in Ohio bought a house for $19,000. Granted, he's putting at least $30k of work into it, but still. I can't get a 2 bedroom condo for under $200k.
Post by goaskalice on Jan 19, 2013 13:01:17 GMT -5
This is why I love to visit NYC but could never live there. We had a hard time justifying housing and cost of living in CA, so we moved to Portland. But CA doesn't really seem to compare at all the NYC! But you've got Broadway, so there's that.
My sister has five kids in DC, my mom is always harping on her to buy a house. A house big enough for 7 people, in that area, that doesn't require BIL to commute a million hours per day, in a good neighborhood, would be outrageous. In my hometown you can buy an older but still perfectly livable, decent size home for under $100k. My first house was 1300 sq feet with two acres and it was $84500 at the height of the market in 2007. Today you can find similiar homes for $65k- $70k.
I always wondered how people could afford to live in Manhattan. It appears that most of them can not afford to live there according to MM standards. I live in LCOL and would never want to live in a city like that and be "house" poor.
I think the article is using Manhattan and NYC a bit interchangeably, and it shouldn't. There are 5 boroughs in NYC, and Manhattan is just one of them. They keep saying Manhattan or the suburbs. But NYC has a LOT more middle income housing options than just the island of Manhattan.
But it's really interesting to think of middle class in so many ways. And yes, its a crazy housing market.
I always hear about rent control. What exactly does that mean?
Rent controlled apartments have strict controls on how much the rent can be increased from year to year. While my landlord can raise our rent as much as it wants (and as much as the market can bear), landlords of rent controlled apartments cannot. The amount that they can increase the rent varies from year to year, but it tends to be much lower than the increases that market landlords will impose on their tenants, and these apartments therefore tend to be way below market rents.
In order to be rent controlled, an apartment has to have been occupied by a person or his/her relatives continuously since 1971. And once rent is raised over $2500, the apartment becomes destabilized a landlord can do whatever it wants with the rent. So it is a pretty rare thing nowadays. There were some rent controlled apartments in our building when we lived on the Upper East Side, and I remember talking to a neighbor who was moving out because the 3br/3ba apartment had become de-controlled because the increases had brought the rent over $2000 (I think that was the threshold at the time), and the landlord was raising the rent to $6000 for the next year.
I think the article is using Manhattan and NYC a bit interchangeably, and it shouldn't. There are 5 boroughs in NYC, and Manhattan is just one of them. They keep saying Manhattan or the suburbs. But NYC has a LOT more middle income housing options than just the island of Manhattan.
But it's really interesting to think of middle class in so many ways. And yes, its a crazy housing market.
I think the article is very clearly about Manhattan and not the outer boroughs. A lot of people who move out of Manhattan because they have children move to the suburbs rather than the outer boroughs.
I always hear about rent control. What exactly does that mean?
There is "rent control" and "rent stabilized".
Rent control means that certain apartments cannot be increased in rent. So, grandma's rent is controlled to the $250 she paid back in 1929 went she originally moved-in (with. Even thought the fair market rate is around $2,500. Grandma pays $250 and she never ever moves out. There are some apartments that even pass-on rent control rates to family members for generations.
Rent stabilized is the term for the percent a landlord can increase an apartment for the next tenant. So an area or block of apartments that are "rent stabilized" can't be jacked up when new tenants come-on. Even if the open market would pay it. Something like 5-10%. So, if someone stays in an apartment for a long time, like a 1-bedroom, then the landlord would only be able to charge the next tenant 10% more. So, small places like studio apartments, that turn over every few years end-up with much higher rents than 2-bedrooms in the same building where people stay longer and raise families.
Sure but just because your income doesn't stretch as far in Manhattan as, say, Pittsburgh, doesn't mean you're middle class. It just means that you're spending more on basic living expenses and less on luxuries. You're paying a premium for your** choice to live in Manhattan. You don't have to live there. I think it's silly for people who make 450k and spend it all on private school, rent, and a nanny to cry poor, which you often see in the comment section of these articles. You're not poor. You just spent all your money, is all.
** General you, not specific to any particular posters
I always hear about rent control. What exactly does that mean?
There is "rent control" and "rent stabilized".
Rent control means that certain apartments cannot be increased in rent. So, grandma's rent is controlled to the $250 she paid back in 1929 went she originally moved-in (with. Even thought the fair market rate is around $2,500. Grandma pays $250 and she never ever moves out. There are some apartments that even pass-on rent control rates to family members for generations.
So how can a landlord even afford to pay the bills when he's only receiving $250 from grandma every month?
I always hear about rent control. What exactly does that mean?
There is "rent control" and "rent stabilized".
Rent control means that certain apartments cannot be increased in rent. So, grandma's rent is controlled to the $250 she paid back in 1929 went she originally moved-in (with. Even thought the fair market rate is around $2,500. Grandma pays $250 and she never ever moves out. There are some apartments that even pass-on rent control rates to family members for generations.
Rent stabilized is the term for the percent a landlord can increase an apartment for the next tenant. So an area or block of apartments that are "rent stabilized" can't be jacked up when new tenants come-on. Even if the open market would pay it. Something like 5-10%. So, if someone stays in an apartment for a long time, like a 1-bedroom, then the landlord would only be able to charge the next tenant 10% more. So, small places like studio apartments, that turn over every few years end-up with much higher rents than 2-bedrooms in the same building where people stay longer and raise families.
Rents can be increased in rent controlled apartments
Rent Increases
In New York City, rent control operates under the Maximum Base Rent (MBR) system. A maximum base rent is established for each apartment and adjusted every two years to reflect changes in operating costs. Owners, who certify that they are providing essential services and have removed violations, are entitled to raise rents up to 7.5 percent each year until they reach the MBR. Tenants may challenge the proposed increase on the grounds that the building has violations or that the owner's expenses do not warrant an increase.
For New York City rent controlled apartments, rents can also be increased because of increases in fuel costs (passalongs) and in some cases, to cover higher labor costs. Outside New York City, the New York State Division of Housing and Community Renewal (DHCR) determines maximum allowable rates of rent increases under rent control. Owners may apply for these increases periodically.
Rents can also be increased in any one of three ways; both inside and outside of New York City:
with the written consent of the tenant in occupancy, if the owner increases services or equipment, or makes improvements to an apartment;
with DHCR approval, if the owner installs a building-wide-major capital improvement; or
Rent control means that certain apartments cannot be increased in rent. So, grandma's rent is controlled to the $250 she paid back in 1929 went she originally moved-in (with. Even thought the fair market rate is around $2,500. Grandma pays $250 and she never ever moves out. There are some apartments that even pass-on rent control rates to family members for generations.
So how can a landlord even afford to pay the bills when he's only receiving $250 from grandma every month?
They can't. That's the criticism.
Or they can and they should stop being assholes to grandma who's on social security and can't afford what you'd charge a hipster NYU student with wealthy parents. Down with the man! Protect grannie!
So how can a landlord even afford to pay the bills when he's only receiving $250 from grandma every month?
They can't. That's the criticism.
Or they can and they should stop being assholes to grandma who's on social security and can't afford what you'd charge a hipster NYU student with wealthy parents. Down with the man! Protect grannie!
But on the other hand, the landlord may have bought the building back when it was worth $20,000, and now it is worth $10 million, and maybe he's charging everyone else in the building $6000 in rent, in which case I'm less sad about the fact that he can only charge $250 in rent for an apartment that should be more like $4000.
And if he bought the building more recently despite its many rent controlled units -- well, he should have known what he was getting into.
Rent control means that certain apartments cannot be increased in rent. So, grandma's rent is controlled to the $250 she paid back in 1929 went she originally moved-in (with. Even thought the fair market rate is around $2,500. Grandma pays $250 and she never ever moves out. There are some apartments that even pass-on rent control rates to family members for generations.
Rent stabilized is the term for the percent a landlord can increase an apartment for the next tenant. So an area or block of apartments that are "rent stabilized" can't be jacked up when new tenants come-on. Even if the open market would pay it. Something like 5-10%. So, if someone stays in an apartment for a long time, like a 1-bedroom, then the landlord would only be able to charge the next tenant 10% more. So, small places like studio apartments, that turn over every few years end-up with much higher rents than 2-bedrooms in the same building where people stay longer and raise families.
Rents can be increased in rent controlled apartments
Rent Increases
In New York City, rent control operates under the Maximum Base Rent (MBR) system. A maximum base rent is established for each apartment and adjusted every two years to reflect changes in operating costs. Owners, who certify that they are providing essential services and have removed violations, are entitled to raise rents up to 7.5 percent each year until they reach the MBR. Tenants may challenge the proposed increase on the grounds that the building has violations or that the owner's expenses do not warrant an increase.
For New York City rent controlled apartments, rents can also be increased because of increases in fuel costs (passalongs) and in some cases, to cover higher labor costs. Outside New York City, the New York State Division of Housing and Community Renewal (DHCR) determines maximum allowable rates of rent increases under rent control. Owners may apply for these increases periodically.
Rents can also be increased in any one of three ways; both inside and outside of New York City:
with the written consent of the tenant in occupancy, if the owner increases services or equipment, or makes improvements to an apartment;
with DHCR approval, if the owner installs a building-wide-major capital improvement; or
Sure, rent control apartments do get rent increases, I meant to add - not by much. Grandma didn't pay $250 back in 1929. But $250 was the real rent my elderly neighbor paid in 1995 for a 2-bedroom NYC apartment by NYU.
Sure but just because your income doesn't stretch as far in Manhattan as, say, Pittsburgh, doesn't mean you're middle class. It just means that you're spending more on basic living expenses and less on luxuries. You're paying a premium for your** choice to live in Manhattan. You don't have to live there. I think it's silly for people who make 450k and spend it all on private school, rent, and a nanny to cry poor, which you often see in the comment section of these articles. You're not poor. You just spent all your money, is all.
** General you, not specific to any particular posters
I think this is a very fair point, and applies to pretty much anyone who bitches and moans about their high cost of living but then doesn't do anything about it. Which is a lot of people
Rent control means that certain apartments cannot be increased in rent. So, grandma's rent is controlled to the $250 she paid back in 1929 went she originally moved-in (with. Even thought the fair market rate is around $2,500. Grandma pays $250 and she never ever moves out. There are some apartments that even pass-on rent control rates to family members for generations.
So how can a landlord even afford to pay the bills when he's only receiving $250 from grandma every month?
Don't landlords/builders get some tax benefit or subsidized loan costs if they agree to rent control/rent stabilization? Isn't one of Mayor Mike's todo items: to honor those commitments and let the landords raise rates after 30/40 years even though their is massive resistance from the neighbors?
Re: the original thread. Look I'm sorry if you "feel" middle class living in Manhattan and sending your kids to private school, but FFS you get to live at the center of the universe, you don't have to own a car, and your kids are going to private schools! These just aren't options for huge chunks of the country, let alone the world. It's so far beyond #firstworldproblems it makes me scream every. Have some perspective.
(this also goes for SF, and to a lesser extent places like LA Chicago and Seattle.)
ETA "you" is more about the people in this article, not any posters here.
Very interesting article. I've also always felt that complaining about the high cost of housing in Manhattan and being unwilling to move to Queens is a lot like living in a McMansion subdivision and being unwilling to move to a normal subdivision 5 miles down the road. That's a lifestyle choice not a cost of living issue.
I also agree that outer boroughs and suburbs are not the same thing, but there's not really a clear definition of suburbs in the NYC metro area. Some people think Inwood is the suburbs, and some people think Princeton, NJ is the suburbs. And if the 5 boroughs are "city" and surrounding is "suburbs" it's a little funny that south shore of Staten Island would be "city" but a Hoboken apartment on the PATH would be "suburb." But similarly, Inwood is in Manhattan but less urban than say downtown Brooklyn.
I always wondered how people could afford to live in Manhattan. It appears that most of them can not afford to live there according to MM standards. I live in LCOL and would never want to live in a city like that and be "house" poor.
It is a misconception that people who live - or at least own an apartment - in Manhattan are "house poor." In fact, in light of the extremely strict coop board requirements to purchase an apartment, owners are anything but house poor. (Most apartments in NYC are coops as opposed to condos which have slightly looser financial requirements.)
Take for simplicity's sake a $1 million apartment. At the very least, you will need to put 20% down (this can increase to 35% to 50% or even 100% in the strictest of buildings on Park Ave). So that's $200,000 (eliminating closing costs for simplicity's sake). You have an $800,000 mortgage at, say, 4.0% interest so your monthly mortgage payment is $3819. Figure that the maintenance/common charges are $2000/month so your monthly mortgage plus maintenance is $5819/month.** The most liberal coops will require you to have at least 12 months of housing payments in liquid cash but that is only the most liberal of coops. Most require at least 2 years if not more. This means that after closing you still need to have at the very least $70,000 in liquid cash after closing but again this would be very rare to find a building that didn't require you have more "cash reserves" leftover after closing. I've seen buildings where you have to have at least half the purchase price of your apartment in liquid cash leftover after closing. This is why Manhattan has had one of the lowest national levels of foreclosure in the country over the last several years - you aren't allowed to buy in to a building unless you show it is not going to make you "house poor."
Now this isn't the exact case for rentals but that said almost every building requires you to earn a salary that is Y times the monthly rent and if you don't have that then you need to have a guarantor co-sign the lease.
**ETA: I used streeteasy's mortgage calculators for these figures so apologies if they are inaccurate
I always wondered how people could afford to live in Manhattan. It appears that most of them can not afford to live there according to MM standards. I live in LCOL and would never want to live in a city like that and be "house" poor.
It is a misconception that people who live - or at least own an apartment - in Manhattan are "house poor." In fact, in light of the extremely strict coop board requirements to purchase an apartment, owners are anything but house poor. (Most apartments in NYC are coops as opposed to condos which have slightly looser financial requirements.)
Take for simplicity's sake a $1 million apartment. At the very least, you will need to put 20% down (this can increase to 35% to 50% or even 100% in the strictest of buildings on Park Ave). So that's $200,000 (eliminating closing costs for simplicity's sake). You have an $800,000 mortgage at, say, 4.0% interest so your monthly mortgage payment is $3819. Figure that the maintenance/common charges are $2000/month so your monthly mortgage plus maintenance is $5819/month.** The most liberal coops will require you to have at least 12 months of housing payments in liquid cash but that is only the most liberal of coops. Most require at least 2 years if not more. This means that after closing you still need to have at the very least $70,000 in liquid cash after closing but again this would be very rare to find a building that didn't require you have more "cash reserves" leftover after closing. I've seen buildings where you have to have at least half the purchase price of your apartment in liquid cash leftover after closing. This is why Manhattan has had one of the lowest national levels of foreclosure in the country over the last several years - you aren't allowed to buy in to a building unless you show it is not going to make you "house poor."
Now this isn't the exact case for rentals but that said almost every building requires you to earn a salary that is Y times the monthly rent and if you don't have that then you need to have a guarantor co-sign the lease.
**ETA: I used streeteasy's mortgage calculators for these figures so apologies if they are inaccurate
Thanks for sharing. This is very interesting. I wish more places were this strict with their requirements so we wouldn't be in the housing crisis we have been experiencing for the last several years. I have never dealt with condos (nor know anyone who lives in one) so I didn't know you could have those restrictions on your building.
It is a misconception that people who live - or at least own an apartment - in Manhattan are "house poor." In fact, in light of the extremely strict coop board requirements to purchase an apartment, owners are anything but house poor. (Most apartments in NYC are coops as opposed to condos which have slightly looser financial requirements.)
Take for simplicity's sake a $1 million apartment. At the very least, you will need to put 20% down (this can increase to 35% to 50% or even 100% in the strictest of buildings on Park Ave). So that's $200,000 (eliminating closing costs for simplicity's sake). You have an $800,000 mortgage at, say, 4.0% interest so your monthly mortgage payment is $3819. Figure that the maintenance/common charges are $2000/month so your monthly mortgage plus maintenance is $5819/month.** The most liberal coops will require you to have at least 12 months of housing payments in liquid cash but that is only the most liberal of coops. Most require at least 2 years if not more. This means that after closing you still need to have at the very least $70,000 in liquid cash after closing but again this would be very rare to find a building that didn't require you have more "cash reserves" leftover after closing. I've seen buildings where you have to have at least half the purchase price of your apartment in liquid cash leftover after closing. This is why Manhattan has had one of the lowest national levels of foreclosure in the country over the last several years - you aren't allowed to buy in to a building unless you show it is not going to make you "house poor."
Now this isn't the exact case for rentals but that said almost every building requires you to earn a salary that is Y times the monthly rent and if you don't have that then you need to have a guarantor co-sign the lease.
**ETA: I used streeteasy's mortgage calculators for these figures so apologies if they are inaccurate
Thanks for sharing. This is very interesting. I wish more places were this strict with their requirements so we wouldn't be in the housing crisis we have been experiencing for the last several years. I have never dealt with condos (nor know anyone who lives in one) so I didn't know you could have those restrictions on your building.
So I guess you put 50% down on your house and have half the purchase price just chilling in your bank account then?