Tips on Saving Money for the Down Payment
The biggest barrier to getting on the property ladder for most millennials is saving for the down payment on a mortgage.
Many would-be homeowners are finding that average house prices are growing faster than their savings pot is, making the prospect of homeownership seem impossible.
As simple as it sounds, the best tip for these mortgage down payment savers is to make a budget and stick to it.
Let’s say someone was looking to save for a 5% down-payment on an average New York apartment (currently worth $308,300, according to Zillow). They could calculate that by saving $322 a month, they’d have a deposit within four years (assuming for the sake of simplicity that their savings interest matched annual house price inflation).
With that target lodged in their head, they would more motivated not to buy that avocado on toast or whatever other extravagance is throwing them off their savings goals.
As author and money-making expert Brian Tracy says, being successful is as simple as determining the price you need to pay to reach your goal, then resolving to pay it.
Millennials vs. Baby Boomers
Although both generations are likely to be sick of the stereotypes the media labels them with, there are many studies that indicateddifferences in the preferences of millennials and baby boomers when it comes to buying property.
For starters, not only do more baby boomers own a home, but a significantly higher proportion believes it’s important to own a home.
In a recent study by think-tank NDN, less than two out of three (64%) of millennials described home ownership as “very important.”
Millennials will also typically be harder to convince to settle in one area for a really long time, and if they do it’ll more likely be in a big city than out in the suburbs. This suggests that a millennial will be more likely to sell a few years after buying than previous generations. This is a generation raised on globalization and instant gratification.
For realtors dealing with millennials, this might mean more time spent selling the benefits of home ownership than they are perhaps used to.
Affluence is perhaps the biggest difference between the two generations. With that in mind, this could be the best opportunity for millennials to buy property in New York.
New figures suggest that Manhattan real estate prices fell below the $2 million mark in Q4 2017, for the first time in nearly two years. Demand for property has dropped by 12% compared to the same period in the previous year, which would explain the price fall, although this dip hasn’t been tipped to last too long.
Tax Breaks and Incentives
for New York Homeowners
If you receive STAR exemption or credit and are planning to reside in a school district that complies with the New York State property tax cap, you may be eligible for Property Tax Relief Credit.
This is delivered as check straight to your address, although you have to have paid school property taxes in the previous tax year to apply. Those with annual incomes higher than $275,000 will not be eligible.
A new tax law surrounding the SALT deduction plan is set to dramatically change the amount of tax that all New York homeowners will pay. The delay surrounding the implementation of this law has even been cited as a major factor behind the slow-down in New York property transactions, although it is definitely expected to be introduced this year.
The SALT deduction currently allows taxpayers who itemize their bill to deduct all of their state individual incomes, sales and property taxes. However, under new plans these deductions will be capped at a maximum of $10,000.