Co-ops and condos: More affordable home ownership
The American dream of owning your own home is still alive on Long Island.
For those venturing into the real estate market for the first time, that big house with the picket fence might have to wait. But thanks to low interest rates and an ample supply of affordable cooperatives and condominiums to choose from, getting your foot in the door might be easier than you think.
Prices of condos and co-ops can run considerably lower than comparable single-family homes, says Ira Freireich of Best Buyer's Broker Realty in Malverne. Freireich estimates that condos are priced at about 85 percent to 90 percent and co-ops at 50 to 60 percent of the cost of similarly situated single-family homes.
In some areas, a buyer can land a studio apartment for as little as $50,000 and start building equity instead of paying rent.
Barbara Ford of Ford Real Estate in Floral Park says that owning a co-op or condo may be less expensive than renting, depending on your mortgage or loan payment and monthly carrying charges, and applicable tax deductions.
For example, she says, in Floral Park, one-bedroom apartment rentals run between $1,200 and $1,400. The total cost of typical mortgage and maintenance payments might be about the same, but, Ford says, the "real cost" of owning that unit could be hundreds of dollars less after tax deductions.
The Mutiple Listing Service of Long Island's latest figures show that in September, the median sales price for residential properties in Nassau County was $423,250, and for Suffolk it was $340,000. In contrast, the median sales price for condos and town houses was $409,550 for Nassau and $318,500 in Suffolk, and for co-ops, the median prices were $189,000 in Nassau and $130,000 in Suffolk.
Median closing prices were down in every category compared to September 2009. Affordability, as defined by MLSLI's index that factors in median family income and home prices, is also up in every category since last year at this time.
"Buying a home is a process," Freireich says. "Take the time to investigate and to research and understand what you are purchasing."
While co-ops won't appreciate as much as single-family homes, they will go up and down with the market, and Freireich feels that prices will not drop over the next five years.
"The bottom line is that you are buying a place to live in now that will sell later," he says.
What: Town house condominium in the Woods at Smithtown development
Where: Jeremy Circle
Common charges: $350 a month
Annual taxes: $7,143
Down payment: No minimum required by the development; down payment determined by lending institution
The unit: Two bedrooms, two full baths, end unit in the Smithtown school district. Amenities include central air-conditioning, skylights, a fireplace, deck, a one-car garage and a private driveway lined in Belgian blocks. The master bedroom has a walk-in cedar closet, and the master bath has a Jacuzzi. The development has a pool, a tennis court and a clubhouse. The home is close to MacArthur Airport and the Ronkonkoma LIRR station.
Listed with: Michele DeLuca, Leesa Byrnes Realty, 631-589-2000
CLICK HERE for more photos and the full listing.
What: Co-operative town house
Where: Atlantic Avenue
Maintenance charges: $1,164, includes taxes
Down payment: Development requires a conventional loan, usually with at least 10 percent down
The unit: Three bedrooms, 2 1/2 baths in the Lynbrook school district. With a private entrance and fenced-in yard, this three-level townhome has the feel of a private house, the listing agent says. Amenities include central air-conditioning, a washer/ dryer, two outdoor and one indoor parking spots, a new eat-in kitchen and an attic. It's within walking distance of the Lynbrook LIRR station.
Listed with: Marlene Gross, Edward McNulty Realty Inc., 516-887-3603
What: Co-operative apartment in the Birchwood Development
WHhere: Brompton Road
Maintenance charges: $793 a month, which includes heat, water, taxes, management fee and the interest on the property's underlying mortgage.
Down payment: 20 percent
The unit: One bedroom, one bathroom with an L-shaped living room that can be converted easily to a second bedroom, the listing agent says. This top- floor apartment in the Great Neck school district has custom closets and a fully renovated kitchen and bath, and is one block from the Great Neck LIRR station and the nearby library, health clubs and shopping.
Listed with: Tina Kupferberg, Laffey Fine Homes, The June Shapiro Division, 516-482-1111
CLICK HERE for more photos and the full listing.
What: Condominium in the Main Street Mews lofts development
Where: South Main Street
Common charges: $360 a month
Annual taxes: $5,300
Down payment: 10 percent; owner financing available
The unit: One bedroom, two baths in the Freeport School District. This loft-like newly constructed apartment includes 17-foot ceilings, central air-conditioning, a T-1 Internet connection, an intercom and a washer/dryer in the three-story elevator building close to the Freeport LIRR station. There's a 1,035-square-foot rooftop deck common area for parties and views of the village.
CLICK HERE for more photos and the complete listing.
What:Condominium in the Coventry Manor development
Where: Crystal Rock Court
Common charges: $270 a month
Annual taxes: $4,800
Down payment: As low as 3.5 percent
The unit: Two bedrooms, 1½ baths in the Longwood School District. This home has new ceramic tile and Pergo floors, all new light fixtures, a new washer, a dryer, a den with a brick fireplace and a pull-down storage area. Development amenities include a play- ground, a pool and a tennis court.
Listed with: Richard Bitzer, Hough & Guidice Realty Associates, 631-345-5600
Figuring the down payment
So just how much does a first-time buyer need to put down on a condo or co-op?
Down payments, says Barbara Ford of Ford Real Estate, can vary by community, but start at about 3.5 percent for a condo, she says. For co-ops, the average down payment required is 20 percent, says Ira Freireich of Best Buyer's Broker Realty. "Ten percent is less common, and sometimes no down payment is required," he says.
If a co-op board asks for less than 20 percent, he says, this may be a sign that the number of owner-occupied units in the cooperative development may be low. Lenders, in turn, could be less inclined to approve a mortgage for the unit. "Know what you are buying into," he says.
Tina Kupferberg of the June Shapiro Division of Laffey Fine Homes in Great Neck recommends a 20 percent down payment to her clients, even if it's not required ,so that the monthly mortgage amount is lower. Ultimately, she says, "Your mortgage and maintenance fees should never exceed 30 percent of your income."
For help with that initial down payment, both Nassau and Suffolk counties offer down payment assistance programs for first-time home buyers who meet certain income requirements. In Nassau, call the Long Island Housing Partnership at 516-572-0818; in Suffolk, call the county's Community Development Agency at 631-853-5705 for more information.
Four things to consider before buying
Take stock of your finances. Determine what you can afford, factoring in mortgage and maintenance or association fees. If possible, get preapproved for a loan by your bank. Since approval by a co-op board often takes months, an offer is more likely to be accepted when a shareholder knows you meet the board's income requirements and can obtain a mortgage.
2. YOUR BROKER
Find an agent who specializes in co-ops or condos, or someone familiar with the developments in your area. Get referrals or meet brokers at open houses. Your broker should be able to advise you on income and other requirements for the co-op or condo you are interested in and also what to expect in an interview with the board.
3. THE UNIT
Decide how much space you need. Will a studio suffice, or will you need more room for the children you plan to have? What are the amenities in the complex? Is there a pool, a clubhouse or exercise room, laundry facilities? Does that matter to you? Is parking included or is a parking space available at an extra charge? What services are included in the carrying charges?
4. THE RULES
Before you sign a contract, find out if you are comfortable with the rules of the development. Are they too restrictive, or could you be happy there? Are you able to sublet, are pets allowed, is smoking allowed, are there any age requirements? Read the development's guidelines carefully before making your decision.