- Late last year, in the middle of the pandemic lockdown, my wife and I bought a Brooklyn apartment.
- After graduating college into the financial crisis, the odds of homeownership were not in our favor.
- The pandemic forced banks to offer historically low mortgage interest rates and allowed us to buy an apartment.
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For the last decade, as friends and relatives bought homes, my wife and I paid rent.
More specifically, we paid rent in New York City – which is to say we paid a lot of money in rent. So, so much. I try not to think about it, honestly.
We did it because we love living here, and Brooklyn is home. I considered it a necessary evil of living in the greatest city in the world.
But this January, just after the most uneventful New Year’s Eve in New York City history, we closed on a one bedroom Brooklyn co-op apartment. If you’d asked me in January 2020, “Will you ever buy a home in New York City?” the answer would’ve been simple: “No, not unless we win the lottery.”
Real estate prices in New York are notoriously high, of course, but that’s just one of several issues facing potential buyers. Not only is it expensive, but it’s extremely competitive. Before the pandemic hit, just going to see an available place in Brooklyn meant competing against people with, frankly, a lot more money than me. I am never going to outbid someone who makes $500,000 annually.
So, how did a couple of avocado toast-eating, cold brew-swilling, MacBook-using millennials manage to buy a home in Brooklyn?
It boils down to several key factors:
1. We are immensely lucky and privileged.
My wife and I graduated from college directly into the 2008/2009 subprime mortgage-spurred market collapse that led to a massive recession. Unlike so many of our peers, we were both tremendously lucky to get jobs directly out of college doing what we went to college to do: I am a journalist and my wife is an environmental scientist. I consider myself particularly lucky in this respect, as the media business isn’t known for its stability.
We are also both white Americans, which confers a variety of privileges throughout our lives. Literally everything was easier because of these factors, and must be acknowledged up front.
Because we were lucky enough to have steady employment for years after college, we had good credit scores from years of paying bills on time. That steady employment history coupled with good credit scores meant we were easily pre-qualified for home loans at low rates.
Notably, we don’t have kids, and we saved money steadily for several years before beginning this process.
2. The pandemic.
Above all else, the global pandemic was the most immediate reason we were able to buy an apartment.
If it weren’t for the coronavirus pandemic, the housing market wouldn’t have been in the gutter. If it weren’t for the coronavirus pandemic, we would’ve had to compete with crowds of interested buyers. If it weren’t for the coronavirus pandemic, mortgage rates would’ve priced us out of the market.
It’s horrifically sad that this is the case, but it’s very much the truth. We locked in a 30-year fixed-rate home loan at a 2.75% interest rate. That is a historically low rate, and enables us to afford the monthly payments. In fact, our monthly payment is just a touch higher than our last rent price.
Unlike rent, though, our mortgage price doesn’t increase over time. If we choose to move, we can sell the place and are likely to earn some money on the sale thanks to Brooklyn’s already rebounding real estate market. The benefits of homeownership over renting, at least in this respect, are so profound that they’re almost comical. In 10 years, when our mortgage is the same but average NYC rent prices have increased dramatically, we’ll really feel the difference.
3. Timing was critical.
In mid-August 2020, about five months into pandemic lockdowns, a really obnoxious piece was published in the New York Post where a former hedge fund manager Manhattanite declared New York City “dead forever” because he saw a video of Black Lives Matter protesters trying to break into his skyscraper. It was part of a gaggle of trend pieces that summer in which panicked rich people speculated that the pandemic would be the end of New York City.
That struck me as the perfect time to start looking for apartments: If the rich are fleeing, and the home loan rate is low, I figured, maybe there would be a chance for us.
It turns out that was more or less accurate: We only saw five, maybe six places, and we saw them at our leisure. Because of the pandemic, all showings were by appointment only, so there was no pressure to outbid other buyers on the spot.
Also because of the pandemic, a lot of people in our situation – married millennials in their mid-30s – were fleeing to the suburbs. It was as close as Brooklyn gets to a buyer’s market for a young-ish couple.
In the end, our offer was accepted for (slightly) below the listing price. For what we paid for a one bedroom apartment, we could own a pretty nice suburban home. But we don’t want a pretty nice suburban home, and we didn’t have to settle for one.
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