New York property prices are much higher than just about any other market. As per Bloomberg Business, the median price for a two bedroom in Manhattan is more than 1.3 million dollars. You can double that per additional room. In other housing markets, the median price for a home is in the $200,000 range.
In other cities in the US, $30,000 is already a downpayment for a house. But in New York City, it’s just the annual rent of a one-bedroom apartment.
An economist from StreetEasy determines how long it takes for a New York City buyer to break even on a home purchase or to reach the tipping point – which is the point when the benefits of owning a home outweigh the benefits of renting. If you’ve been renting in New York City for more than 5 years, then you’ve passed it.
But why buy when you can rent in the city? Especially if any of these things ring true:
If the mortgage interest rates are too high
Out of all the boroughs, Manhattan is the most expensive to buy in. Jed Kolko, the chief economist for Trulia, Inc., while buying is 38 percent cheaper than renting nationwide, it’s more complicated in New York. If the mortgage interest rates are lower than 7 percent, buying is better, but if they go over, then renting becomes cheaper.
If you anticipate a move in the future
If your relocation to New York City is due to work, and you will most likely move every few years or so, then renting is a better decision.
If you buy, the high buyer and seller closing costs will eat into your net worth every time you buy and sell. But if you see yourself being able to hold on to your apartment by renting it out when you relocate, then go for it.
Owning property entails a lot of costs, make sure you know what you’re getting yourself into. Also, make sure you don’t buy a co-op apartment since those have restrictions when it comes to subletting.
You don’t want to deal with maintenance costs and upkeep
If you’re looking to own property in New York, be aware of the maintenance and upkeep costs and real estate tax that comes with it. The monthly mortgage is not the only costs that come with owning property, especially in NYC.
If you like the idea of being able to call someone, like a super, to take care of a leak or something broken, then renting is the better option for you.
You’re in it for the short-term
If you’re in it for the long-term, then buying an apartment in NYC makes sense. There are huge costs to owning property in New York City. There are unexpected expenses too like repairs and maintenance.
If you have your property renovated only to find out that the windows do not meet the approval of the board, you’re looking at replacement costs in the thousands to replace them.
You need to be in a strong financial position to be able to weather the unexpected. Owning property can drain you emotionally and financially.
There’s also the fact that you need to be a statesperson yourself to protect yourself against injustices in NYC real estate.
You enjoy freedom and flexibility
If you enjoy freedom and flexibility — believe it, there are some people who relish familiarity — then renting will suit you more than buying.
Once you enter a lease to rent an apartment, you are allowed more flexibility for when you move. Getting tired of the noise and rush in your neighborhood? You can move once your lease is over.
If your income has increased and you are ready to move into a bigger place, you don’t have to deal with selling your place and settling the costs that come with it.
As a renter, you can move within a month’s notice. As a homeowner, you will need to go through the drawn-out process of listing and selling your property.
So, there you have it. In a world where everyone tells you that buying is better than renting, they are probably not from New York City and more likely not aware of the monumental costs of owning and selling a property in the city.
Unless you a property investor, you’re better off renting in New York. Check out our no-fee apartment rentals in Manhattan.