According to real estate website trulia.com, the average price per square foot for a single family home in New York City is currently $1,198. A 1,200 square foot home would run an average of $1,437,600. The New York City housing market is not alone in its exclusiveness. Properties in other major metropolitan areas throughout the country, such as Boston, San Francisco and Chicago also come with a high price tag.
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While you could expect to pay more or less depending on the particular neighborhood, unless you have a job with remarkable pay and benefits, it might be difficult to afford your dream home in a premier market like New York City. Homebuyers who look outside the city limits, or have the flexibility to explore a different city, can often find their dream homes - for less. Note - all figures from trulia.com. (For more, see Why Your First Home Shouldn't Be Your Dream Home.)
Try a Different Neighborhood
Despite the average listing price in New York City of $1,809,169, prices vary dramatically between neighborhoods. In the highly desirable Upper East Side market, for example, the average listing price is $2,480,996, well above New York's overall average. Look in Hamilton Heights, and the average listing price drops to $620,067. Popular with artists, teachers and other professionals, this neighborhood offers many of the benefits of the more premier New York City markets, without the price.
Boston is another example where the neighborhood makes a big difference in price. Though the average listing price is $850,748, a home in Boston's Back Bay neighborhood will cost an average of $2,240,564 with an average price per square foot of $699, versus the nearby Jamaica Plain neighborhood, which has an average listing price of $397,458 and an average cost per square foot of $288. (For more, check out The Truth About Real Estate Prices.)
Look Outside the City Limits
Many people who work in cities like New York cannot afford to live there. A qualified real estate professional can recommend a nearby market that is more reasonably priced. Take New York City, for example. Nearby Hoboken, New Jersey, has an average listing price of $573,039, with an average price per square foot of $508 - dramatically less than NYC's $1,809. Or consider Jersey City, New Jersey, another area close to NYC, which has an average listing price of $367,934, and an average price per square foot of $156. For homebuyers willing to look outside of - but near - a city, they may be able to get a whole lot more house for their money.
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Explore a Different City
People love New York City for its cosmopolitan style, exciting night life and cultural opportunities, and the hustle and bustle that comes with a big city. There are, however, other cities that offer diversity, culture and the arts, and plenty of excitement. For people not tied to a particular city because of family or employment obligations, exploring a completely different city might uncover attractive buying opportunities, at a fraction of the cost of living in a city like NYC.
While nothing can quite compare to the Big Apple, cities like Atlanta, dubbed "Hotlanta" for both its high summer temperatures and abundant nightlife (average listing price: $381,185 / $129 per square foot), and Austin, Texas, known as "the live music capital of the world" (average listing price: $414,775 / $103 per square foot) can offer homebuyers some of the excitement of a bigger city, at a much more affordable price.
Compromise? It Might Be Worth It
Many potential homebuyers have a good idea of exactly what type of house would make them happy, whether it's a traditional three bedroom, two-bath Tudor home or a cute bungalow. Sometimes, however, the dream home budget doesn't fit in with a desired market, and buyers are forced to look in different neighborhoods, nearby cities or suburbs, or completely different markets. Lenders are no longer willing to dole out huge mortgages for more house than people can afford, and many buyers are more careful about how much debt they take on. If a buyer cannot afford a dream home in the market of their choice, it sometimes pays to expand the search to an adjacent market or an entirely new area, to find a dream home for less. (For more, check out 4 Real Estate Markets Set To Rebound In 2011.)