Hi Andrew, That's a good question. Typically, we evaluate the home value in terms of income or cash flow, instead of net worth. We generally recommend that you keep your mortgage to no more than 2x, or 2.5x annual household income. While you can get loan approval for more than this amount, keeping your mortgage within these limits gives you cash flow margin. We also recommend that you allocate 3% to 5% of your home's value, each year, to maintenance and upkeep. If you are an experienced handyman, you might be able to allocate less than this. Hope this helps.
Your home and your 401(k) will likely be your largest financial assets. You are wise to seek some advice here!
If you are borrowing money to purchase the home then the cash flow hit from the mortgage payments (plus New York, NY property taxes) as opposed to the cost of the property is the primary determining factor in calculating affordability/comfort for your particular situation. While you may be able to afford a particular monthly mortgage payment, will it limit the cash flow available to fund other financial goals (retirement, education)
If you are paying cash or a substantial amount down, the math gets more complicated and should include an analysis of the impact of a large down payment on the future growth of your net worth (both before and after taxes).
For example, will a large down payment prevent you from maximizing your 401(k) contributions? Those same dollars will likely grow fast in your 401(k) investments than in real estate equity (Brooklyn could be an exception though). I hope this helps.
Happy house hunting!