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Is It Better To Rent Or Buy In NYC? |
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About the organization Curbed:
Type: Business
Sub-Types: Website, Blogging, News, Online News, Telecommunication, Telecommunication Software, Application Software, Real-Estate, Property |
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| Expensive and New York City are two words that often go hand in hand, especially when we’re talking about real estate. The city has been the second-most-expensive place to rent in the country for several years now, behind only San Francisco. The median rent for a one-bedroom recently surpassed $2,900, while a two-bedroom can easily cost upward of $3,200. As far as buying goes, according to Zillow, the median price of homes currently listed in New York is $674,000—but that number is much higher in Manhattan.
Still, the age-old question of whether it’s best to rent or buy is one that’s frequently asked by those mulling a move to New York—and even current city denizens.
And here’s the truth: There is no easy, one-size-fits-all answer; whether you should rent or buy depends on a number of factors.
Two of the biggest things that will affect your real estate predilections are time and money. For the former, if you find a place you love and can see yourself spending many years there, buying may be the better option. But buying a place comes with additional costs beyond a monthly rent payment (or mortgage, in this case) and utilities—there are also property taxes and monthly maintenance fees and/or common charges to consider.
And as far as money goes, you’ll need a lot of it up front: In most cases, lenders prefer (or even require) buyers to have 20 percent of the purchase ready as a down payment. Let’s say you’re looking at a home around the median price of $674,000; to hit that 20 percent down payment, you’d need about $135,000—and let’s be honest, how many people have that kind of money lying around? (And that doesn’t even take into account closing costs, which can number in the tens of thousands of dollars even for the cheapest homes.)
There are programs, like Federal Housing Administration (FHA) loans, that allow buyers to put down a lower down payment (as low as 3.5 percent, in some cases), but financial experts say that this is not exactly the best strategy and may demonstrate that one is not ready for the financial strains that come with homeownership. (Plus, a lower down payment means you’ll likely get stuck paying mortgage insurance.) The city’s Down Payment Assistance program may help, but there are eligibility requirements: You have to be a first-time homebuyer, you have to meet certain income thresholds, and you must live in the home for 10 years, among other factors. |
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