The size of starter homes in New York City is shrinking, StreetEasy says

First-time buyers often have to compromise on space or location to find an apartment that is within their budget. The rising interest rates and low affordability push homebuyers in New York City to look for properties with smaller square footage. 

Today, a typical starter home in the five boroughs is 9 percent smaller than it was three years ago, before the pandemic, according to the new market report from StreetEasy. The local real estate marketplace defines a starter home as an apartment, which has at least one bedroom, and the asking price ranges between $400,000 and $800,000. 

In Manhattan, starter homes offer the least amount of space, with only 686 square feet, which is roughly the same as the size of four and half parking spots in New York City. However, Manhattan is the only borough where the median square footage of starter homes has increased in the past years. Now, first-time buyers can score an apartment with 17 more square feet than three years ago for the same budget. 

Starter homes in Brooklyn are now 8 percent smaller than they were three years ago. The median square footage for an affordable apartment in this neighborhood fell to 924 square feet. The median asking price per square foot climbed to $658, the second highest after Manhattan. 

After being priced out of the housing market in Manhattan and Brooklyn, many homebuyers search for more affordable options in Queens and the Bronx. However, most new buildings in Queens tend to have smaller units than older buildings. According to the report, starter homes in the Bronx and Queens have shrunk the most, by 208 square feet and 150 square feet respectively. The median price per square foot in Queens reached $608 and $386 in the Bronx, the lowest among all five boroughs.

“Asking prices across NYC are moderating gradually after sharp increases this spring, as buyers jumped into the market to get ahead of rising interest rates,” StreetEasy economist Kenny Lee wrote in the report. “As the sales market continues to rebalance, some priced-out first-time buyers should be able to find opportunities to rejoin the market.”

Resources:

“Affordable NYC Homes for First-Time Buyers Offer Less Square Footage Than Three Years Ago,” by Kenny Lee (StreetEasy, 2022)

“New York City’s incredible shrinking starter home market,” by Sasha Jones (The Real Deal, 2022)

“Sky-high prices and rising mortgage rates shrink NYC starter-apartment sizes,” by Emily Myers (Brick Underground, 2022)