Today is my BIRTHDAY and I woke up at 4am in Reykjavik, Iceland after a 24 hour layover to head to Berlin. Iceland was cool and I’m glad I had a day to check out Reykjavik, which is really beautiful, but I’m definitely going back with a crew and enough money/time to rent a car and drive the whole country.
In light of my being abroad, today’s New York Value is about how living in NYC makes it so easy and cheap to travel compared to most of the United States. New York is home to two large airports, JFK and LaGuardia, and although Newark is in NJ it’s still very much a NYC airport. LaGuardia is a domestic Delta hub, while JFK and Newark are major international airports with cheap service around the country and world. I thought living in VA and having such easy access to Dulles was amazing, but pretty much any time I compare prices, flying from NY is substantially cheaper.
I met a girl yesterday who goes to school in LA, and she expressed how jealous she was at what I’d paid for my flight (very little), and how easy it is for her East Coast friends to visit Europe, Africa, and the Middle East (ok, she just said Europe, but it holds true for all). Although it’s easier for West-coasters to get to Hawaii and Southeast Asia, Eastern Europe is my favorite place ever, so I’m glad I’m on the better coast (KIDDING! I love CA/Oregon/Washington, but I have no interest in living there).
Real Estate Value? Also international themed.
NYC’s housing market has remained stable throughout time in a way that very few can. Part of this is the city’s role in the international economy. Part of it is also the barrier to entry of owning, especially in Manhattan, and most specifically related to the concentration of co-ops.
Having enough money to purchase a co-op is not enough; you also need to show you have two years of “post-closing liquidity” after the sale. In a co-op your monthly HOA fees are called “maintenance,” and you basically need to prove that you will have, in cash or easily liquidated stocks/investments, 2 years of this amount, as well as your mortgage payments, after you buy. For instance, many apartments on the lower end of the price range in Manhattan, at $500k, will then have maintenance at roughly $1000/month. So with 20% down, you’re looking at handing over $100k in cash, getting a $400k mortgage, paying your closing costs (which vary, but let’s say 4% of the purchase price for this example, so another $20 grand), and then need to show about $70-80k more in the bank. This is, of course, after you have an accepted offer, sign contracts, submit a board package that includes such documentation as your past 2-4 years of tax returns, recent bank statements, letters of recommendation, landlord recommendation, employment letters, have your credit and background checks, etc. Oh, AND then you have the interview with the co-op board if they think your application is up to snuff.
I don’t mean for this to scare anyone off of buying! Honestly, in this city it’s shocking the amount of money and documentation needed simply to rent mean that if you’re in the habit of signing leases rather than just subletting and floating around, buying isn’t all that much crazier. And because co-ops are so strict, during recessions there is very little fluctuation in their values; your asset’s value is pretty protected. There’s a reason all these very wealthy foreign investors have historically and continue to park their cash in the NYC housing market.
Hope you’re all having a great week, and are getting more sleep than I’ve had the past few days! It’s shocking that this is even remotely coherent.