NYC homeowner costs rise nearly three times the inflation rate
Already-squeezed Big Apple homeowners have been hammered by co-op and condominium board fees that have surged nearly three times faster than the rate of inflation, according to data from a top real estate appraiser in the city.
The skyrocketing fees — fueled by tougher rules on inspections, escalating insurance premiums and preparations for a strict new climate law — have added hundreds or even thousands of dollars to monthly bills, according to Bloomberg.
Generally, owning an apartment in a co-op means coughing up hefty sums per month on top of a homeowner’s mortgage that goes towards the underlying mortgage on the building, building insurance and maintenance.
Condo owners typically also have to pay fees for upkeep — which may include heat and hot water costs, garbage collection and payments towards cleaning the building’s public spaces — that hover around $1.68 per square foot, according to Jonathan Miller of real estate appraiser Miller Samuel.
This means that owning an apartment in the Big Apple — which isn’t that big, as they average 975 square feet, per research firm UrbanDigs — costs roughly $1,638 per month on top of the monthly mortgage payment.
The increase in bills meant to cover utilities, labor and basic building maintenance jumped about 54% from the first quarter of 2020 to the third quarter of 2023, according to Bloomberg, citing data from Miller Samuel — 2.8 times more than the 19% increase US consumer prices experienced in the same period, per the Bureau of Labor Statistics.
US inflation rose 3.7% in September, more than economists expected and still well above the Federal Reserve’s 2% target, as the central bank weighs whether to hike interest rates again by year’s end.
Meanwhile, as the city implements stricter building standards, homeowners are expected to pay more in maintenance fees in the coming years — costs critics have argued are excessive, Bloomberg reported.
After Upper East Side resident and prominent Manhattan architect Erica Tishman was killed by a chunk of façade that fell from a building, authorities were quick to double its façade inspection team, adding 11 staffers to its previous team of 11.
Within a week of Tishman’s tragic death, NYC’s Department of Building also implemented more stringent requirements to repair crumbling walls and install sidewalk sheds to protect passing pedestrians from falling debris.
The exterior walls of every property more than six stories high must be examined every five years under the Façade Inspection and Safety Program, which also requires repairs of unsafe conditions to begin immediately and be completed within 90 days.
An inspection of a 100-unit building in Brooklyn with 200 feet worth of exterior walls would run a building roughly $30,000, RAND Engineering and Architecture’s principal Peter Varsalona told Bloomberg.
If a postwar building has cavity walls — which are usually implemented for insulation, soundproofing and stability purposes — it can expect a bill to be about $20,000 more, raising the inspection price to $50,000, the outlet reported.
In a co-op using Varsalona’s example, each unit owner would be responsible for a proportional share of the cost.
After Tishman was fatally struck with the debris, which was made of terra cotta, New York City mandated that faulty terra cotta façade elements be fully replaced rather than repaired.
Varsalona said recasting pieces made of terra cotta, renting scaffolding, insuring the project and hiring consultants could translate to a bill as high as $2.5 million.
In a 100-unit co-op, homeowners in the building would be on the hook for around $25,000 each on top of existing monthly payments, according to Bloomberg.
“Everything’s a cost. How much can you put on co-op shareholders? There are limits,” Varsalona told Bloomberg.
“Many owners are going to have to figure out if it is affordable to live in the city or not,” added Varsalona, who is also president of the Council of New York Cooperatives and Condominiums.
One of the most costly threats to NYC homeowners is Local Law 97, which would require buildings with more than 25,000 square feet to replace their old heating oil and natural gas boilers and switch to electric heat so as to cut down on greenhouse gas emissions.
As many as 800,000 co-op and condo apartments would be impacted if the climate change law were to be passed ahead of the new year as city officials aim to reach a 40% reduction of greenhouse gas emissions by 2030 — and 80% reduction in citywide emissions by 2050.
The law is more stringent than Gov. Kathy Hochul’s ban on gas stoves, which only applies to new construction.
The Real Estate Board of New York commissioned a study that concluded that more than 3,700 properties would be out of compliance as early as next year if Local Law 97 is passed, spelling over $200 million per year in penalties.
By 2030, when the city plans to implement stiffer fines, 13,500 NYC buildings would cumulatively face penalties as high as $900 million for the year, REBNY found.
Overhauling a residential building’s heating and cooling systems generally amounts to somewhere between $20,000 and $25,000 per unit, Pete Sikora — a campaigns director at New York Communities for Change, which advocated for Local Law 97 — told Bloomberg.
