Apartments Sell—But Who's Buying? A Look at Today's Purchaser

Thirty-eight of the 400 individuals on Forbes magazine's list of the richest Americans—almost ten percent—call New York City home. All thirty-eight are billionaires. Some of them, like Ralph Lauren and Donald Trump, are household names. Two of them are Rockefellers. One of them, Michael R. Bloomberg, is the mayor.

The point is, big money is so integral to the Big Apple that when the appraisal firm Miller Samuel reports that the average apartment in Manhattan is selling for $1.22 million, New Yorkers respond with a shrug.

But let's put that in perspective. According to the National Association of Realtors (NAR), the average home price for the entire United States is $220,000, give or take. That means—ready for this?—the average apartment in Manhattan costs a million dollars more than the average U.S. home.

Let's break it down further. Most co-ops require a minimum of twenty percent down (the super-exclusive buildings on Fifth and Park Avenues and Central Park West often require a full cash purchase, but that's a different article entirely). Then there are the closing costs. Mortgage taxes, legal fees—there can be as many as five attorneys at a closing: the buyer's, the seller's, the co-op's, and the two banks'—appraisal costs, mortgage taxes, transfer fees, flip taxes, and, for all apartments sold at a million bucks and higher, the so-called "mansion tax" of one percent. (The six percent broker's fee, generally evenly divided between the listing and selling agencies, is picked up by the seller). When all is said and done, you need about $220,000 up-front in liquid cash to buy a million-dollar apartment. For that amount of money, you could buy a house outright most places in the country.

Everybody Else

All that said, most New Yorkers are not Rupert Murdoch, Carl Icahn, or David H. Koch (numbers 32, 24 and 19, respectively, on the Forbes list and the three richest men in Gotham). In fact, according to Bloomberg News, the average yearly income in Manhattan is a "mere" $73,000. So who's buying these seven-figure apartments, and how are they doing it? Is now a good time to buy? To sell? To move to Pittsburgh? And what does the future hold for New York real estate?

Read More...

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9 Comments

  • I was wondering what the trend of utilizing a "stager" in order to get the best possible price in a shorter window of time is a good seller's strategy. Also are stagers typically getting kick backs from the agency itself?
  • There is no "mortgage tax" for closing on a Co-op. Please correct.
  • When is a flip tax paid? If I up grade to a larger apartment do I pay a flip tax on the old?
  • Lewis, You need to check with the managing agent of your coop to determine if there is a flip tax. Not all coops impose a flip tax and the amount varies on those that do. it could be a fixed dollar amount based on shares, or it could be a percentage of the profit, usually in the 1% - 10% range. Please contact your managing agent to verify.
  • Bklyn Resident for Clean Air! on Saturday, December 27, 2008 3:52 AM
    Butts Blanket Bklyn:But Do they Have To?With the mayors staff on call 24/7 giving people ways to stop smoking there no reason for people to continue to abuse their bodies.If you fail a dozen times to quit dont give up.Your life depends on it and so does the life of ex and non smokers!!Give it your all and dont give up.Do it for yourself,your neighbors,your community.There no reason for Butts to Blanket Bklyn!!Good Luck.
  • "There is no bubble," she says. AH HAHA!!!!!!
  • when is the best time to sell a nyc co-op?
  • Q.When is the best time to sell a nyc co-op? A. When Spring arrives.
  • Gojdanic@corcoran.com on Wednesday, January 25, 2012 1:53 PM
    As for the best time to sell...the first quarter has proven to be the most active year after year. This is caused by pent up demand as new listing tend not to come on the market toward the end of a given year. Staging an apartment is recommended if you have a poor/bad view from your apartment. Buyers are drawn to the windows when an apartment is empty. Brokers are not allowed to provide a kickback as they could get in trouble with the agency they work for.