One of the biggest decisions you will ever make in your life, and if you are like most people, you will have to make it multiple times, is not only where to live, but how to live. By that I mean do you live in an apartment, a condo, a co op or a house and do you buy or do you rent. The answer is not black and white, especially in a place like New York City, where the housing market is to say the least expensive and volatile.
As someone who was involved with the real estate market in New York City for over 40 years as a renter, home owner and most importantly a real estate agent, my advice as always been to buy if at all possible. All you get for the rent you pay each month is a receipt that is not worth a thing. What makes it possible is a combination of two things, The state of the real estate market and the state of the persons finances as well as what they actually need. Real estate is an investment as well as a home and you have to strike at the right time to give you the best shot at making as much of a profit as possible.
For instance, the past several years in New York City and much of the rest of the country as well was a sellers market. There were more people looking to buy homes than there were homes available and the law of supply and demand came into effect and prices skyrocketed. Now the situation is different and it is a buyers market, just the reverse. However, there are fewer people looking to buy because financing is hard to get. It seems like and oxymoron to say it is a buyers market when not that many people are in a position to buy. However, this is the time to strike. The people who bought homes during the sellers market are seeing the value of their homes going down a bit and it will take them longer than they thought it would to see the value go up again. But it will. Because it will be a sellers market again. If I knew when, I could make a fortune. This the normal cycle of things in the real estate market.
So we know it is the right time in the cycle to buy, but is it right for you? The first thing that will determine yes or no is your financing. Go to several lending institutions, see how much they will pre approve you for and check out the terms they offer. If you can get good financing at a monthly payment you can afford, start looking. If not, wait a bit. The buyers market looks like it is going to be with us for a while yet. If you are able to rent and still save money, it might be a good idea to build up your cash so you can make a sizeable down payment. Not only will it make lending institutions more likely to want to do business with you, it will make your monthly payments way less, and over the course of your mortgage save you thousands of dollars more.
There are people for whom buying a home is almost a necessity, though. Those with a large family, a professional who needs to have his or her office at home etc. Also, anyone looking to buy a house has to be willing to do a certain amount of home maintenance, both indoor and out. Not so much with a condo or an attached town house, which New York City has a lot of, but with a house and a yard, be prepared to spend your Saturday’s taking care of it. If you do not fit this profile, continue renting or buy a condo.
Lets take a look at each part of New York City, see what it has to offer and just who would be happy buying there. In Manhattan, you will have to go for a condo unless you want to pay a few million for a mansion. Except in the north end, up near Harlem, which is fast becoming one of the hottest places to live. Most of the condos in Manhattan are in older converted buildings and are small, with the most two bedrooms. Not for a large family at all. For the young professional, a newly married couple yes. There is new condo construction going on, and they are bigger unites, but you can end up paying two or three times as much as you would for a house in one of the outer boroughs.
In those boroughs, Queens, Brooklyn, the Bronx and Staten Island you can find a home starting at about $300, 000 and going to the millions. Queens and Brooklyn will be more expensive in general than the Bronx and Staten Island. Condos will go for less.
The further away from Manhattan you go, the better the prices will be. But if you do not mind the travel- and all of the suburbs have great transportation to Manhattan by train and express bus- you can get a much larger house for much less money. This goes for the communities on Long Island and to the north in counties like Westchester, Duchess etc. Yes they have communities with million dollar homes as well, but a great majority will be much less.
So do you buy or do you rent in New York City? It is up to you to determine which profile fits you. If you cannot buy during this buyers market, you have to rent and save. When your situation changes, then you can start to look. Keep an eye on the market. It is best to buy during a buyers market, but even during a sellers market, if you move fast, you can catch a bargain. Then there is the option of buying a two family home, but that is a story for another time.
