Co-op sales and prices on the Upper East Side took a dip in the last quarter of 2016 due to increased demand from first-time buyers who were then turned off by the arduous co-op application process, DNAinfo reports.
Co-op sales in the neighborhood in the last quarter of 2016 fell by 17 percent from a year earlier, and prices dropped by 2 percent to $1.6 million, according to the Real Estate Board of New York.
Many first-time buyers were scared off by the "onerous" co-op application process and opted instead for condos or other options, says Corrine Pulitzer, an agent for Douglas Elliman. "First-time buyers are just getting to know the market, and getting qualified for co-ops is a huge challenge because bank-worthy is not co-op worthy. They do look to the Upper East Side and love the apartments, but a lot of the co-ops have a very onerous formula for buyers and they don’t meet that criteria... A lot don't allow [purchasing with a guarantor or parent]."
Co-ops are getting more difficult to apply to as co-op boards continue to ramp up vetting efforts, according to Pulitzer. "If a young person is just starting their career and they don’t have a history, the concern is if they lose their job, who will pay the maintenance and mortgage?" she says. It is not uncommon for a co-op board to require a list of the purchaser's liquid assets and for the buyer to have a gross annual income equal to or greater than 40 times the sum of their monthly debt. Letters of recommendation from employers are also seen as desirable by many boards. And legislative efforts to speed up the application process are routinely shot down.
"Co-ops come with a lot of baggage,” Pulitzer says, “which is why tenants need deeper pockets.”
Which may also be why so many buyers are turning to “condos and other options."
Thinking of buying a co-op or condo? Already bought, and not sure how co-op/condo life and rules work? Learn all about purchasing a place and living in your new community. It's not like renting, and its not like owning a house. What's it like?