According to World Population Review, in 2020, New York City is the most populated city in the United States with 8,622,357 people living there. Manhattan is one of the best-known boroughs in NYC, and you’d love to move there. However, you’re still debating. Should you rent or should you buy in Manhattan?
If you’re not sure whether Manhattan life is for you permanently, then it’s better to rent than buy so you’re not stuck. For those who know that the city life is all they want, then buying can be a great investment.
In this article, we’ll investigate the scenarios in which renting in Manhattan is a better idea than buying and vice-versa. By the time you’re done reading, you should be ready to proceed with your decision and move to Manhattan!
The Case for Renting in Manhattan
Between renting and owning in Manhattan, more people choose to rent. ValuePenguin, a Lending Tree resource, says that, in 2022, 67.2 percent of homes in New York are rented and 32.8 percent are owned.
ValuePenguin counts studio apartments as homes, FYI, so many of these renters lease an apartment rather than a house.
Let’s take this section to explore why that’s advantageous.
You Can Leave Whenever You Want
Let’s be real. As the 2020s have gotten underway, the whole world is living in flux. A few years into the pandemic, that hasn’t changed as much as most people wish it would.
It’s still very hard to predict a stable future, especially when the crystal ball is so fuzzy. People these days can feel like they’re flying by the seat of their pants, and that makes future-proofing their lives difficult to impossible.
If you’re concerned about laying down roots anywhere because you don’t know what the next two to five years will look like, no one can blame you.
In a scenario like that, renting makes more sense for you. You’ll still be tied to your lease and required to finish out its terms before you can move, but that’s only a matter of months, usually.
It’s far easier to get out of a lease than it is to sell a condo, apartment, or home you own. You’d have to put your property on the market and wait for buyers before you could even begin planning how you’ll make your grand exit.
You Can Easily Upsize When You Outgrow Your Place
At first, it was just you and your roommate. Then your roommate’s roommate moved in and now it’s feeling crowded.
Perhaps you found a great partner and decided to share an apartment to cut down on expenses. You might even be having a baby or bringing home a menagerie of fuzzy, four-legged friends.
No matter the reason, as a renter, you’re allowed to say, “I need more space” and then immediately get to work on earning more space by upgrading your apartment size.
As a homeowner or an apartment owner in Manhattan, you can still feel those space constraints, but there’s not too much you can do about the restrictive squeeze.
Sure, maybe if you have thousands to hundreds of thousands of dollars lying around, you could pay to get your home expanded, but that’s not convenient nor financially feasible for a lot of people.
You’d either be forced to deal or put your home on the market and try to sell, and we already talked about what a process that can be.
You Might Find It Easier to Buy Later
Most renters in Manhattan don’t want to rent forever. They eventually dream of owning that apartment, condo, or home in the great city of New York like such an elite few do.
By renting, you’re usually spending less than you would to own a piece of NYC real estate. According to Rent Café, the average Manhattan renter will spend $4,265 per month for a 702-square-foot apartment.
Zillow states that the home value index for Manhattan homes is $759,901 with a 7.7 percent price increase between 2021 and 2022.
As a renter, you can save up for those high home prices and strike when the iron is hot. This is more advantageous than living outside of Manhattan and waiting for that seemingly elusive day when you’ll finally be able to become a resident of this great city.
The Case for Buying in Manhattan
As great as renting in Manhattan is, imagine how wonderful it would be to have a place that you can always reliably call your own. You could settle down here, start a family, watch your lineage grow, and live out the rest of your days in your favorite place in the world, Manhattan.
It’s a dream for many, but if it’s doable for you, here are some reasons to own a home or apartment in Manhattan rather than just rent.
You Know You Want to Stay in Manhattan
Renting is great if you want to try new places out year after year, but that’s not something you’re interested in. You’ve always known that NYC is the place for you, and you couldn’t imagine living anywhere else.
If you’re positive that you want to stay in Manhattan no matter what’s around the corner–which, these days, can be almost anything–then buying makes more sense for you.
You Appreciate Stability
Renters seldom know what’s around the corner. Is their rent going to go up next year? Is a new neighbor going to move in who’s going to be unbearably loud or otherwise ruin their peace and quiet?
When you own a slice of New York real estate, there’s far more predictability in your day-to-day life.
You get to know your neighbors, and most of them aren’t leaving either. You’re locked into a mortgage term where your rates won’t change for the next X years, so you don’t expect to see any surprises in your statements.
This kind of stability is something that only Manhattan property owners get to enjoy.
Some people like the thrill of the unknown and get bored of the same routine day in and day out. If that’s you, then renting works better. For those who crave a calm and consistent life for their own sense of balance, you should look into owning.
You Want Tax Benefits
Here’s another perk that only property owners get, tax benefits!
If you buy your New York home, condo, or apartment with a mortgage and you invest, you might be able to take advantage of the 1031 exchange.
This investment rule means you can change investment properties and then defer any capital tax gains or losses that you would have to pay when investing.
There are a lot of rules for eligibility for the 1031 exchange, such as the investment having to happen within a very limited timeframe. You can defer taxes for potentially up to a decade though, so it might be worth looking into!
You’re Eager to Get in Before Sales Prices Are Even Higher
The pandemic rocked the country, especially when it came to the price of housing. In many states, including New York, home prices dropped for several years at the start of the 2020s.
Now, a reversal of that fortune is imminent. Sales prices are going to rise again, with an estimated mortgage rate increase of three percent in 2022.
Maybe you’re too late for such a sudden move, but who knows what the mortgage rates are going to look like for the rest of the decade?
By acting now and making your goals of Manhattan homeownership come true, you could avoid another potential sales spike that could be coming somewhere down the line.
Most people say that it’s better to rent than own in Manhattan. We agree that renting can be a great way to dip your toes into the water of what NYC life is like and gauge if it’s really for you.
Compared to renting in other parts of the country though, renting a Manhattan apartment is going to be costly. Owning a piece of New York real estate is costlier still, so you may wish to rent, save up some capital, and then buy.
Manhattan will always be one of the most beloved cities in the US, making it a great place to live whether you rent or buy!
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