Should you rent or buy in NYC?

Moving Tips NYC - August 20, 2020

Expensive and New York City usually go together, especially when you look at real estate. The Big Apple is still one of the most expensive places to rent in the US. So, what’s the savviest business move – is it to rent or buy in NYC? Our Capital City Bins experts know that there’s no easy, one-size-fits-all answer! This depends on various factors, so read on to learn our conclusions.

Two of the biggest factors that will influence your decision of whether you should rent or buy in NYC

For the latter, if you find a property you love and can see yourself spending many years there, buying may be the perfect solution. But buying a place comes with additional costs. Firstly you need a moving budget which should include green box rentals. Secondly, most lenders require buyers to pay 20 percent of the purchase up front as a down payment. But how many people have that type of money lying around? Keep in mind that this down payment doesn’t even include closing costs, which can be in the tens of thousands of dollars. (Even for the most affordable homes).

An apartment you will decide whether to rent or but in NYC.
Homeowners in New York City are likely to pay higher property tax as a result of the new cap.

Bottom line: Financial advisers say that a prospective homeowner should have some savings put aside to cover all of these costs. Also, some unexpected expenses might turn up once you are a homeowner. In order to prevent any type of trouble and hidden costs when moving to NYC, you should request an estimate. Bonus tip: For a more streamlined, simple, and worry-free transition into your new home, use our plastic moving boxes for your upcoming relocation. You won’t have the hassle of assembling cardboard boxes.

Do people rent or buy more?

As if all of that bank and mortgage business isn’t daunting enough, there is a new tax law that has created a “layer of uncertainty” in the real estate arena. The new tax burdens are weighing over the market and have made the decision to rent or buy in NYC just a little more difficult. To make matter worse, the average rent in Manhattan recently hit an all-time high of $3,600/month. As far as purchasing a property goes, according to Zillow, the average price of homes currently listed in New York is $674,000. But keep in mind that this number is much more inflated in Manhattan.

A woman holding money she will need to calculate before deciding.
New York Times has a convenient calculator that helps you find out if it’s better to buy or rent, based on personal fortune.

Another thing to keep in mind

If you do have the funds to purchase a home, another factor to consider is what financial experts call the tipping point. This is the point in time in which the benefits of owning a home transcend the benefits of renting. Nationwide, the median tipping point is currently around two years. However, in the Big Apple, it has been 5.8 years, though this number differs considerably according to the neighborhood. A general rule of thumb: The more expensive a home is, the longer you’ll need to live in it for your investment to pay off as opposed to renting. 

Ultimately, the decision to either rent or buy in NYC cannot be based solely on hard data. Firstly, you may want to take time to build up your bank account before committing to buying. If you do have your finances in order, lucky you! Contact us if you are committed to staying in one place long-term. The good news is that right now, New York’s real estate market is full of wonderful opportunities!

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