What is the Cost of Living in New York City?
What does it take to afford one of the most expensive cities in the world? Here is a breakdown of the cost of living in the Big Apple.
New York City offers a lot in the way of job opportunities and cultural experiences, but be prepared to pay more than the average American if you want to call NYC home.(Getty Images)
As the epicenter of the country's business, fashion, art, media and financial markets, New York City is a haven for professionals and creatives seeking virtually unlimited opportunities, surrounded by some of the best dining, shopping, nightlife and real estate in the world.
New York has always attracted those who aspire to prove themselves in "if I can make it there, I can make it anywhere" style. But the city's near-endless opportunities for work and play do not come cheap.
Here's what you can expect to pay while living in the New York City area:
- $563,100 is the median home sale price for the New York City area, based on Zillow data. That figure jumps to $945,100 for Manhattan alone.
- $2,900 is the median monthly rent for the metro area, or $3,450 for Manhattan, based on Zillow data.
- $127 will buy you an unlimited 30-day MetroCard, good on New York City buses and subways.
- $514 per month per person for groceries, per data from crowdsourced information site Numbeo.
- The sales tax is 8.875%.
- In addition to standard federal and state income tax, New York City residents also pay a city income tax ranging from 2.907% to 3.876%, depending on income bracket.
Read:The Best Places to Live in New York ]
The True Cost of Living in New York City
New York City ranks No. 90 in the U.S. News 2019 Best Places to Live list, with the highest score on its report card being its near-perfect desirability ranking (9 out of 10). This figure reflects Gotham's unwavering popularity as an in-demand destination. The Big Apple also received strong ratings for its thriving job market.
According to data from the U.S. Census Bureau, the median annual salary for the New York City metro area is $63,799, which is strong compared to big cities in the rest of the country. The median annual salary for the 125 most populous metro areas in the U.S. is $50,620.
According to real estate portal StreetEasy, renters in Manhattan, the city's most expensive borough, pay $18,900 in average annual housing costs, while homeowners pay $36,252 per year. However, homeowners spend a smaller percentage of their income on their housing than renters, according to the statistics. Manhattan renters earn $62,173 on average per year, giving them a 30% percent housing cost-to-income ratio. Homeowners, meanwhile, average $142,046 in earnings annually for a 26% percent cost-to-income ratio.
Out of the 125 metro areas on the Best Places to Live list, New York City is the fourth-most expensive place to live in the U.S.
Read:The Guide to Buying a Home. ]
Home Prices in New York City
The median home price for the New York metro area is $563,100 as of February 2020, according to data from real estate information company Zillow. That's nearly double the national median home price of $249,700. In the Manhattan market, that figure skyrockets to $945,100, or almost four times the national median.
As with most major cities, home costs vary sharply across New York City neighborhoods. Those with their eye on Tribeca, Nolita, SoHo in Manhattan or the Boerum Hill-Cobble Hill-Carroll Gardens section of what is colloquially known as Brownstone Brooklyn will pay some of the highest prices in the city – and country. Recorded 2019 sales prices in these desirable neighborhoods ranged from $1.45 million to $4.1 million, according to StreetEasy. However, there are values to be found in Queens, the Bronx and Staten Island neighborhoods where price tags fall well under the city's median.
Affording a Home in New York City
There is no doubt that buying a home in the most central neighborhoods of New York City is a challenge, but it is by no means impossible. Mortgage interest rates are near historic lows right now; Freddie Mac reported the average 30-year fixed-rate mortgage rate on March 19 was 3.65%, a slight increase from the 3.29% two weeks prior that hit a nearly 50-year low for mortgage rates.
Saving for a down payment is often the most significant barrier to entry for homebuyers. Potential New York City buyers should be aware that, due to extremely high demand, down payments of less than 20% are practically unheard of in the city. If available, those properties are likely to be in outer-borough neighborhoods that are seeing community rebuilding efforts without displacement (basically improving neighborhoods without gentrification, which pushes prices up).
Many upscale co-ops often demand even more than 20% down or forbid financing altogether. With multifamily buildings being the prevalent housing choice in the city, don't forget to factor monthly maintenance or common charges into your housing budget as well.
Other Costs of Living in New York City
As the fourth-most expensive city in the country, you'll see higher prices on many products and services in the Big Apple.
Food is a major expense for most households. In New York City, families can expect to spend about $725 per month on food compared to the national average of about $660, according to the Bureau of Labor Statistics. Busy New Yorkers, surrounded by the world's best restaurants, also spend a larger portion of that food budget on dining out – about $324 per month in New York City versus $288 for all Americans.
Another area where New Yorkers outspend the rest of the country is education. New York City is home to several elite private schools and universities, making them an attractive option for parents and college students. In New York, all households spend an average of $3,000 per year for education expenses compared to the national average of $1,407. Fashion-conscious New Yorkers also spend more on apparel: $2,574 per year compared to $1,866, according to the BLS.
However, thanks to the extensive public transit system, transportation is one area where New Yorkers save. Nearly 90% of U.S. households own at least one car, a figure that falls to 45% in New York City. As a result, city dwellers spend an average of just $8,494 per year on transportation, or $1,267 less than the average U.S. household.
See:The Best Apps for House Hunting ]
How to Afford New York City
New York City may be expensive, but due to its sheer size, there are bargains to be found across the five boroughs. Sure, New York is home to 76 Michelin-starred restaurants, but there are also excellent inexpensive cafes, diners and food trucks on every corner.
There are abundant free entertainment options across the city, as well. Free summer movies and concerts fill local parks every summer. Museums offer free days, and many are pay-what-you-wish all year-round. A stroll through Central Park or along the High Line costs nothing at all. Enjoy a no-cost harbor cruise courtesy of the Staten Island Ferry, or snag free seats at "Saturday Night Live," "The Daily Show" or one of the many other shows that film in the city.
To save on housing costs, renters would do well to find a roommate for sharing expenses. Those looking to buy a home in New York City should save as large a down payment as possible and work on their credit score to secure the best mortgage rate. Choosing a comparable alternative to your pricier dream neighborhood is another great way to save if you want to afford New York City living.