Navigating NYC Real Estate with Curbed's Joey Arak

It would be an understatement to say that New York City’s real estate market is a maze. With too few available rentals and a surplus of fresh transplants, finding a home of your own can be more than a little bit daunting. We asked Joey Arak, Senior Editor of Curbed.com, for some advice on how to navigate the intricacies of the New York City market and his thoughts on the future of real estate in New York.

Where do you currently live and how long have you been there?

I live in Stuyvesant Town, and have for about 5 months.

Are there still affordable neighborhoods in New York and what do you think are the top five most affordable places to live right now?

Depends what you mean by affordable, but if it’s buddying up with a roommate on a two-bedroom priced under $2,000 per month, sure, but you’re fooling yourself if you think you’ll wind up in a prime location in Manhattan. Scoring a deal like that Downtown or elsewhere is the exception, not the rule, though those apartments are occasionally out there. For regular success, you have to go further out from the city center, a lot of times to the neighborhood that’s one more out from the one you actually want to live in. Uptown Manhattan, like Washington Heights and Inwood, have some good deals, and in Brooklyn, the eastern parts of Williamsburg, Prospect Heights and the neighborhoods just south of Park Slope are good places to look.

I just read a story about Manhattan foreclosures being on the rise. How do you think this will affect the city in the next year?

It’s true that they’re on the rise, but the levels are still so low, especially when compared to the rest of the country. Something like 1 in every 50,000 Manhattan homes, compared to 1 in every 500 in L.A. In Queens and some low-income parts of Brooklyn (East New York and Brownsville), the numbers are worse, but foreclosures aren’t a huge city worry right now.

What is your stance on renting vs buying in New York?

Unless you’re in a position where money is no object and those 30 million bucks are just burning a hole in your pocket, renting seems safer right now. The market is so flooded with overpriced inventory — we’re in the age of the million-dollar studio apartment — that the dollar doesn’t go very far.

I’ve always thought that the idea of a co-op sounded much more beneficial to the co-op owners. Do you think they’re a good investment when you’re usually taking on a hefty mortgage and forking out monthly maintenance fees (sometimes in upwards of $800)?

Co-ops are usually cheaper on a per-square-foot basis than condos, but they have to be judged on a per-building basis. They are essentially run as their own individual countries, each with its own set of laws. Some charge big fees when you sell an apartment, some are extremely strict about subletting or renovating your apartment. That’s why it’s tricky to say co-ops are uniformly better investments.

Does the 40x rule (equating your salary to 40 x the monthly rent) still apply to today’s renters?

It depends on the landlord, but many (especially in Manhattan) will still want a co-signer if you don’t meet the 40x requirement. Another quirk of the NYC real estate market.

I overheard a young woman in her early twenties mention on the subway that she paid $1,000 to share a bedroom with someone in the Washington Square Park area of Manhattan. Do you think these young people who bunk up in apartments are fueling the flame when it comes to landlords demanding exorbitant rents in prime neighborhoods such as that one?

It’s a question of supply and demand. There is so much demand to live in Manhattan (the vacancy rate is almost non-existent) that landlords can get away with charging exorbitant rents and young people who don’t mind sharing rooms will sink their salary (and their parents’ financial aid, much of the time) into a cramped apartment. If they don’t, someone else will.

Do you think there will ever be a tipping point in which rents will have to go down or will they just keep creeping up?

Some analysts think the recent turmoil in the financial markets will send Manhattan rents downward, due to layoffs and belt tightening among the same crowd that has been snatching up pricey apartments over the past few years. We’ve already seen landlords offering incentives, such as paying the broker’s fee or including two free months of rent, but for the most part prices remain high.

What do you think New York will look like in ten years in regards to the people who live here? Will it be a place that only the rich and the pseudo-rich will be able to afford?

Well, Manhattan is an in-demand island, and new land can’t be created. For that reason, it’ll always be an expensive place to live. But the market moves in cycles, and most people would tell you it’s flattening out or heading down in the near future. In that case, you may start to see a reversal of sorts, when young graduates who are now automatically moving to Brooklyn because of the cost of living will start to filter into Manhattan again. That being said, who knows, in 10 years we might be in the midst of a whole new boom. In that case, it’ll be all diamond-encrusted jetpacks and caviar made from aliens.

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