Buying a home is the dream of hundreds of New Yorkers burdened by rising rents in the Big Apple, in addition to local taxes that suffocate the finances of low- and moderate-income families.
BUT HOW FEASIBLE IS IT TO REALIZE THAT GREAT DREAM AT A TIME WHEN INFLATION REACHED ITS HIGHEST RATE IN FOUR DECADES?
According to a housing report for 2022 of Realtor.com, a real estate listing website operated by Move, Inc., a subsidiary of News Corp, and headquartered in Santa Clara, California, this is set to be a breakneck year for buyers in the nation’s largest markets. And the New York metropolitan area will be no exception.
Overall, local home prices in the United States are expected to rise 2.3% in 2022 from a recent average of $619,000.
Housing affordability will be a growing consideration. While buyers who act quickly may have a better chance of finding a home within their budget as inventory is expected to recover from COVID-19 lows, home sales in the New York area are forecast to New York City-Newark-Jersey will drop 3% in 2022.
According to Realtor.com, 2022 is set to be a very competitive year as home sales hit a 16-year high and trends like workplace flexibility enable more homebuyer success.
Recovery from recent declines caused by COVID-19 will also begin as the supply of homes for sale has risen 0.3%, and affordability would become more complex as mortgage rates rose to 3.6%, prices Prices rose to new all-time highs such as 2.9%: rent growth rose 7.1%, while revenue rose 3.3%.
“Affordability will become more of a challenge as interest rates and prices rise, but remote work can expand search areas and allow younger buyers to find their first home sooner than they otherwise might have. another way. And with more than 45 million millennials within the top first-time shopping ages of 26-35 by 2022, we expect the market to remain competitive,” says Chief Economist Danielle Hale.
Researchers at Realtor.com expect home sales to grow as much as 6.6% year over year and hit the highest levels in 16 years, leading to a fairly competitive market in the coming 2022. Recent survey data showed that 53% of millennials are buyers who plan to purchase their first home within the next year.
In 2021, low mortgage rates helped buyers manage their monthly housing costs.
Even though rates are set to rise in 2022 by 2.9%, the 3.3% rise in income and falling unemployment will help keep homeownership affordable for buyers.
Looking at the New York-Newark-Jersey City region in particular, the report forecasts a decline in sales growth of 3% and an increase in price growth of 2.3%.
According to Realtor.com, during the pandemic and COVID-19, viewers of suburban home listings increased by 42.1%, expect suburbs to remain more popular than large urban metro areas as homebuyers search for properties relatively affordable and larger.
SO HOW MUCH MONEY DO YOU NEED TO AT LEAST START LOOKING FOR A PROPERTY?
The median price of a New York home sold in 2021 was $370,000. That’s a 19.4% increase over the 2020 average price of $310K, according to the New York State Association of Realtors (NYSAR).
But that covers a wide range at different locations within the Empire State.
For example, the median price in St. Lawrence County was $93,500 last year. But in Manhattan, the average cost was $1.1 million.
Nationally, the median home price in November of last year was $481,700, according to the United States Census Bureau.
The median home sales price in New York has increased since 2017. The table below shows median sales growth between 2017 and 2021.
| YEAR | AVERAGE PROPERTY PRICE |
| 2017 | $245,000 |
| 2018 | $262,500 |
| 2019 | $278,000 |
| 2020 | $310,000 |
| 2021 | $370,000 |
OVERVIEW OF WHAT IS REQUIRED TO BUY A NEW YORK HOME
- $370,000 is the median home sales price
- $11,100 is the minimum down payment in NY (3%)
- $74,000 is the average down payment (20%)
- 718 is the required average credit score
MORTGAGES ON THE RISE
According to NYSAR, mortgage rates were at record lows with a 30-year fixed-rate mortgage at 3.10% last December, up from 3.07% in November, according to Freddie Mac. However, NerdWallet shows that mortgage rates are rising. On January 21, it had risen to 3,598% for a 30-year fixed-rate mortgage.
Existing home prices might rise another 2.9% and the market will remain competitive, according to Realtor.com’s 2022 housing forecast.
LOANS FOR FIRST TIME HOME BUYERS IN NY
If this is your first time buying a home with a 20% down payment, you can get a conventional loan with a low interest rate. And you won’t have to pay for private mortgage insurance (PMI).
Of course, few first-time buyers have saved a 20% down payment. But the good news is that you don’t need that much. New York homebuyers can often save money up front by using one of these low down payment mortgage programs:
- FHA loan: backed by the Federal Housing Administration with a 3.5% down payment and a minimum credit score of 580. But you’ll be on the hook for mortgage insurance until you refinance to a different type of mortgage, move house, or pay off your loan.
- VA Loan: for veterans and service members only. Zero down payment required. The minimum credit score varies by lender, but is often 620. There is no ongoing mortgage insurance following closing. These are arguably the best mortgages available.
- USDA Loan: for those with low to moderate income who shop in designated rural areas. Zero down payment required. Credit score requirements vary by lender, but are often 640. Low mortgage insurance rates.
SONYMA Mortgages: The New York State Mortgage Agency offers low-cost loans and the possibility of down payment assistance to qualified borrowers.
Depending on the mortgage loan you choose, you might be able to move into your new home with minimal cash out of pocket.
These programs even allow you to use down payment assistance to cover your down payment and closing costs.
If you’re not sure which loan program to choose, your loan officer can help you find the right match for your finances and home-buying goals.
The New York State Mortgage Agency (SONYMA) offers statewide assistance to first-time homebuyers in New York. This includes affordable home loans as well as down payment assistance.
For example, their Acheiving the Dream program is a 30-year fixed-rate mortgage with only a 3% down payment. And you only have to pay 1% out of pocket; the rest may come from down payment assistance (excluding co-op buyers).
There are certain requirements to qualify for SONYMA programs, including:
- Consistent and verifiable income going back two years.
- Acceptable credit score, probably 580 or 620, depending on the type of loan you want.
- Enough income to live comfortably and cover the costs of home ownership.
- Use the house as your primary residence.
SONYMA maintains a list of approved mortgage lenders; so the buyer will have to obtain a mortgage loan through one of those lenders to fully participate in their programs.
The agency also says it will connect you with “nonprofit housing counseling agencies throughout New York State to help you navigate the homebuying process and prepare for successful homeownership through one-on-one counseling, homebuyer education classes, workshops, and more.”
SONYMA has two major Down Payment Assistance Loans (DPALs) that are available statewide.
While these are loans rather than grants, they both come with no monthly payments and no interest charges. Better yet, they are forgiven following 10 years.
That means you don’t have to pay a penny back as long as you stay in the house for a decade. If you move, sell, or refinance that home before the 10 years are up, you’ll have to pay back 1/120th of the amount you borrowed for each month less than the 120 months that the 10 years last.
The standard DPAL allows you to borrow 3% of the purchase price (up to $15,000) or $3,000, whichever is greater.