Should I rent or buy? This question has plagued people for years, and while buying a home used to make smart financial sense, things have changed in recent years—especially since the pandemic. Whether you are moving for work or just want a change of scenery, if you are planning to move to New York City, you might be wondering, would it be better to buy or rent in NYC?
Buying is the best choice for people who want to lock into current prices, take advantage of tax benefits, and plan to stay in the city long term. However, renting might be the best choice for people who cannot afford a large deposit, would rather not be responsible for maintenance and repairs and are unsure how long they will remain in the city.
Continue reading to learn more about the benefits of both buying and renting to better decide which option might be right for you.
Reasons Renting Might Be Better Than Buying
Times are changing and the things that were once important for older generations, such as getting married and becoming homeowners, are no longer a major part of the American Dream, but why are so many people choosing to rent instead of buying their own homes?
- To avoid maintenance and repair bills
- To avoid property taxes
- To save money
- Because they cannot find what they want in the housing market
- To avoid locking into a 30-year loan
- Freedom to move without hassle
You Never Have to Worry About Maintenance or Repairs
One of the biggest benefits of renting has always been avoiding maintenance and repair fees. If something breaks, you simply call the landlord.
Let’s pretend you are buying a home when suddenly, the furnace stops working and, after spending a couple of hundred dollars to have someone look at it, you find out it needs to be replaced. The average price for a new furnace is between $3,000 and $8,000, which is a lot of money to have to shell out unexpectedly. However, if you are renting, this becomes the landlord’s problem.
Of course, the downside of this is that not all property owners are created equal, and you might end up waiting months for that furnace to get replaced if it is replaced at all.
You Avoid Property Taxes
When you rent, you avoid paying property taxes and depending on where you live, this can save you thousands of dollars a year. Property taxes are calculated depending on where you live, the tax rate, and the market value of the property.
Of course, it should be noted that property owners might include the price of property taxes in the rent each month, so you may end up paying for the property taxes even though you do not own the home.
There Are Not as Many Options Currently on The Market
Currently, there are not as many properties selling, and buyers do not have as many options to choose from. Because of this, it may be a better idea to rent until the market regains inventory and you can find a property in a good location with popular amenities.
To Save Money
Historically, people opted to rent while they worked and saved money for a larger down payment. The more you can put down on a home, the lower your mortgage payment will be. Additionally, when you have a large deposit, you have more loan options to choose from and can secure a better interest rate. Also, renting was always cheaper than buying a home, and people could rent apartments for much less than the price of a mortgage payment.
Of course, with the cost of rental units spiking in New York City, renting may not be the cheaper choice anymore, and it might be more expensive overall.
To Have Freedom
Buying a home is a long-term commitment and some people do not like the idea of locking into a 30-year loan. Being tied to a property can make it difficult if you want to move for a job offer or just want a change of scenery. If you are unsure where your future may lead, renting might be the best choice for you.
Of course, it is possible to buy a property that increases in value and would easily sell if you ever decided to move later in life.
Reasons Buying May Be Better Than Renting
Many of the benefits that used to come with renting are becoming obsolete, and there are times when buying might be the better choice. So, why should you consider buying instead of renting?
- The security that comes with owning a home
- Investing in your future
- It might be the cheaper choice
- You will lock into the current price
Owning Your Home Provides Security
When you rent, you are at the mercy of a landlord, and if that landlord ever decides to sell the place or evict you, you really have no other choice but to leave—even if you have paid your rent on time. This can put you in a terrible situation if you have nowhere else to go. However, when you own your own home, you have the security of knowing that unless you default on the payment, no one will ever kick you out of your house.
You Are Investing in Your Future
Although nobody will kick you out, you may decide you want to leave. If you rent a place, you cannot recoup any of the money you have spent over the years, but when you buy a home, you may be able to sell it and get back a substantial portion of the money you have spent on your mortgage payments. In some cases, if the house has appreciated in value, you may get more.
Additionally, if you pay the home off, you can sell it later in life and use that money towards your retirement.
Buying Can Save You Money in the Long Run
The average cost of a studio apartment in New York City is around $3,500, and for a larger 3-bedroom apartment, that price increases to around $6,000 a month. The average cost to buy an apartment in New York City is between $800,000 and $1.5 million.
If you were to rent an apartment for $3,500 a month for the next 30 years, you would spend just over 1.7 million dollars, which is money that you will never get back. If you plan to live in New York City long-term, buying might be the better choice.
Buying Now Allows You to Avoid Future Price Hikes
The prices of rent have steadily increased since the pandemic and are forecasted to continue to rise. At the same time, houses that were valued at $150,000 two years ago are now selling for well over $200,000 today. Who knows what these numbers will look like in another five years, especially if prices continue to follow the same trajectory. Buying now allows you to lock into these prices and avoid any future price hikes.
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