New York City is an expensive housing market. However, this is one of the most progressive cities around the world, and numerous circumstances point to it being a relatively good time to be a buyer in the New York City housing market. Due to the mid-March news of the COVID-19 breakout, especially, home prices are on the decline.
New York City Housing Market 2020
The New York City housing market has experienced quite a turbulent year thus far. The first quarter of 2020 looked to be incredibly competitive for home shopping, benefiting both buyers and sellers. However, once the Covid-19 outbreak hit NYC in March, the housing market plummeted to all-time lows.
Based on statistics from Streeteasy.com, they saw 73% fewer new listings placed on the website from March 15 through March 29 than just the two weeks prior. Buyer activity also slowed dramatically. During the same period, 58% fewer homes entered into contract compared to the first two weeks of March. Even rentals fell 52% during the Covid-19 outbreak. Rent prices didn’t change, and, in fact, 20% fewer landlords offered discounted rental rates for new contracts.
New York City Housing Market Prediction for the Rest of the Year
What do all these numbers mean for the rest of 2020? Good news for buyers! If you’re looking to purchase a home in NYC during 2020, now is absolutely the time to get in. According to Zillow’s index, you can expect the median home price in NYC to be lower – a lot lower. In 2015, the median housing price was $652,728. Today, it’s at $509,000. That’s a 28.24% drop in median housing prices. Over the past year, houses decreased by 0.8% across all homes on the market. If you want to buy, get in now. Prices are expected to bounce back and increase by 3% over the next twelve months.
Buying a House in NYC: What Credit Score Do You Need?
When you’re getting started in the home buying process, the first thing you’ll need to address is your credit score. A home loan or mortgage lenders use your credit score as the primary way to determine how much of a loan they will give you and at what interest rate. If your score is high enough, you’ll have your pick of loan options and premium interest rates. A score that is too low, however, will give you only limited options and interest rates that might even be prohibitive to purchasing a house at all.
A score of 740 or higher is ideal and considered to be “excellent” credit. Scores of 700 to 740 are still in a beneficial zone, with most loan options available. Once your score dips below 700, however, you’ll find that fewer loan options are available, and your interest rates will start to increase.
Another factor of your credit that lenders will examine is how much credit you have and how you use it. Do you have credit cards? Student loans? Car loans? It’s fine to have all of these – as long as you’re paying them off each month. Twelve-month payment history is beneficial to prove reliability.
What Credit Score Do You Need to Rent in NYC?
If you’re only looking to rent, instead of buy, you won’t need as high of a score to qualify. Landlords and apartment managers will look for a minimum of “fair” credit scores. The better your score, the more likely they are to approve your application. If you have a particularly high score, you’ll be aided in negotiations if you want to ask for a better price. Higher scores tell landlords that they won’t have any trouble with you paying your rent regularly and on time.
If you want a number average, most NYC landlords look for a credit score in the range of 650-700 at a minimum. Those with 680 are rarely turned away.
Common Mortgage Types
Now that you know what scoring range to shoot for, you can look at loan types and determine which ones you qualify for. Here are the four most commonly available mortgages.
A conventional mortgage is a home loan offered by a bank or other standard loan institution. They will be looking for higher credit scores to approve due to the risk they take on when offering a loan. The better your score, the more likely they are to approve you for a loan. Higher scores receive the lowest interest rates, as well.
The Federal Housing Authority offers home loans to qualifying home buyers with a credit score of 580 and higher. They also allow minimal down payments, starting at 3.5%. The only downside to these loans is that buyers will need to pay mortgage insurance. Mortgage insurance protects lenders in case of a default, and payments are made for the life of the loan.
If you’re a service member, you can qualify for a VA loan. These home loans offer a $0 down payment and allow you to finance the total price of your home. If you need to refinance a current mortgage, you can also use a VA loan for refinancing purposes. These can only be used when purchasing your primary residence. So if you’re thinking of buying a vacation home, you’ll need to apply through a different avenue.
These loans are available to those with a credit score of at least 640 and are low-interest with zero down payment required. These are specifically designed for low-income Americans who lack high enough credit to qualify for conventional mortgages. If you apply for this loan, you are required to purchase a home in a designated coverage area that is suburban or rural.
New York City: A Thriving Place to Live
New York City is an expensive city to live in, but that doesn’t mean that it won’t be worth it. NYC is a thriving place to live and work that rewards its residents with a fast-paced and satisfying life. Stated by a credit repair NYC specialist, if you’re planning to buy a home in NYC, figure out what credit score you need, then go forth and apply for those home loans.