Can You Afford to Live in New York?

For many Americans, moving to New York -- particularly New York City -- is the dream. Living in New York is often thought of as synonymous with success, "making it," and being at the center of the American experience. No doubt, there are plenty of reasons to want to move to New York -- but the rising property rates and cost of living have put it out of reach for a lot of people, perhaps permanently. We'll take a look at just why it's so difficult to live in New York, and strategies for first-time homebuyers in the state.

The Reality: Cost of Living in New York

So just how expensive is it to live in New York? Let's have a look at the number one example nationwide: New York City, by most measures, is the most expensive US city to live in. The average rent for a two-bedroom apartment will run you about $4,400 a month. The median home price in NYC starts at 2.3 million. A single daily taxi ride will run you about $35, and a monthly ticket for public transport is $138. In short, it's a pretty expensive place to live. One of the few perks for homeowners is that home insurance in NYC is actually lower than the national average -- a mere $869 annually, per numbers from The Zebra's Kristine Lee. But first, you have to be able to afford a home at all -- more on that below.

What's Driving Up Property Rates in New York?

Before we dig into the root causes of New York's runaway property rates, let's take a moment and go over the many reasons why New York City is such an appealing destination. It has a justified reputation as one of the biggest melting pots in the world, with a diverse population across many distinct neighborhoods and boroughs. That, in turn, means an astonishing variety of cuisines, languages, and traditions, offering a rich cultural landscape.

There are also the many career opportunities, especially in the Big Apple itself, which is one of the world's biggest hubs for finance, technology, media, and more. Whether you're looking for a job on Wall Street or hoping to make a name for yourself in the art world, there's likely something there for you.

It's this appeal that plays a major part in making New York such an expensive place to live. When supply is low and demand is high, prices go up -- and New York is one of the most in-demand places in the entire United States, if not the world. New York has limited space, and the real estate market is highly competitive, with no relief in sight. NYC in particular is a densely populated global economic hub, and thus commands prices that might leave a lot of prospective homebuyers out in the cold.

Strategies for First-Time Home Buyers in New York

So what if you want to try to find a home in New York? Are you just out of luck? The answer is: it depends.

If you're looking for an affordable place in Manhattan, you're unlikely to find one unless you're one of the lucky few who considers 1.3 million dollars affordable. Fortunately, there are some strategies you can deploy to try to make this process easier.

First, consider the cost of a condo or co-op. Seventy-five percent of Manhattan properties are co-ops, so it's quite likely you'll find yourself at least considering it as an option. When you buy a co-op, you're essentially buying shares in a private corporation that owns the property. There is usually a rigorous application and approval process you have to go through. Purchasing a condo is similar: while you can purchase the dwelling itself, the land belongs to someone else. Condos are quite a bit more rare in New York, however.

Next, give some serious consideration to the neighborhood you choose. While there may not be a "cheap" neighborhood in NYC, some are definitely more expensive than others. Look for emerging neighborhoods that are "up and coming" and balance the available amenities with the prices you're likely to be paying.

It's likely you'll also have to make some lifestyle changes if you want to be able to live in New York. This means reevaluating your spending habits, entertainment choices, and your budget for things such as transportation and eating out. Those world-class restaurants are a major perk to living in New York City, but they can also be a major drain on your finances -- so you may have to be mindful and make a few financial sacrifices to make ends meet. You can also take other steps to help bring your bills down, such as using free tools to search online for cheap New York home insurance and comparing quotes between various insurers.