Rent vs. buy: It’s one of the more pressing choices of adulthood. Many of us may have been taught from a young age that home ownership is synonymous with success. However, being a longtime renter can offer its own kind of stability that shouldn’t be discounted. The truth is that there’s not a “one size fits all” answer. The decision to rent vs. buy is an extremely personal one, and it’s a choice that shouldn’t be taken lightly. Stressed? Never fear: we’re here to help you! Continue reading for some questions to ask yourself when pondering whether you should rent or buy in New York City.
Who is involved in this decision?
A key piece of information that can help you figure out whether to rent or buy is who you’d be making this decision with, if anyone. Maybe you’re embarking on this exciting journey by yourself. While this means bearing the economic load of renting or buying alone, it also means that you have total control over your vision for your future home. Alternatively, maybe you have a partner who will be splitting rent with you or a parent who is gifting you a one-time donation to help you with your down payment. Financial benefits aside, the more people involved in actualizing your housing dreams could potentially mean the more people you have to compromise with down the line.
Make a list of your “must haves” for your future NYC home – including budget, location and amenities – and be sure to discuss your needs with others as needed. Having some non-negotiables could help you figure out if renting or buying is the best course of action for everyone involved.
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What is your current financial situation? And what are your money goals for the future?
Finances are obviously a huge factor when deciding whether to rent vs. buy. Purchasing a home comes with a lot of money spent up front: You need to budget for not only a down payment, but also for closing costs, prepaid property taxes and homeowners insurance. Over time, however, the costs of maintaining your home could balance out against a rising property and neighborhood value, making it a favorable move compared to renting. Our handy tipping point calculator can help you determine how many years you have to live in a home for it to be cheaper to buy than to rent in NYC.
Buying a home also allows you to build equity, which you can borrow against and use as a financial safety net. Taking out a home equity loan can be extremely beneficial if hit with an unexpected financial crisis. You can also use a home equity loan to consolidate debts or to help fund home improvements, which in turn raises the value of your property.
On the flip side, renting requires much less money up front (though upfront rental costs in NYC are nothing to sneeze at). As a renter, you’re only on the hook for monthly utilities (water, electricity, etc.) as opposed to maintenance fees or common charges and taxes. Thus, being a long-term renter could prove more beneficial if you have savings or investment goals you’re still trying to reach. Learn more about renter fees in NYC here and home-buying costs in NYC here.
Thinking about buying in NYC? Chat with our complimentary, licensed Concierge to learn about the buying process.
Where do you see yourself in a year? 5 years? 10 years?
When considering whether to rent vs. buy, don’t just evaluate your current lifestyle, finances, and needs: Take the time to anticipate your future responsibilities, too. Really thinking about what your life could look like in a year or more can help you decide if home ownership is feasible or even desirable.
For example, if you see yourself staying in your current job for the long haul or even anticipate getting a raise, there’s a good chance that you’ll be able to continue to afford the mortgage payment you lock in at the time of purchasing. However, if you’ve been wanting to make a big career jump or if your industry is more gig-based, having the flexibility of a rental might be more prudent. Other factors to contemplate are plans to expand your family, plans to help out older relatives and plans to move to different cities or neighborhoods. While none of us can totally predict the future, it’s important to give some thought to yours while deciding whether to rent or buy a NYC property.
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When do you plan to make your decision? (aka what is the current market like?)
So you’ve created your list of housing must-haves, assessed your current financial situation and gauged your future plans. What’s next? It’s time to consider the current NYC market. Take some time to research the available listings in your desired neighborhoods. (We’re always updating our lists of open sales and rental units!) Get familiar with the average for-sale prices and rental rates so that you’re not blindsided by sticker shock. Investigate current mortgage rates and brush up on the Fair Housing Act. While there are a lot of factors outside of your control when it comes to renting or buying a home, you can control your own knowledge base so that you are sure to make the most informed decision possible.
What is your “why?”
Before you make a decision about whether to rent vs. buy, the most important thing to contemplate is your underlying motivation. If you feel pressure to own property because you want to make your family proud or because you think it’s something that you “have” to do, take a deep breath and remember that you’re allowed to define success on your own terms. On the other hand, if you have the financial means but feel the need to stay renting because you’re afraid of taking a big leap, ask yourself: What would happen if you dreamed a little bigger for yourself? Reconnecting to your true desires will help guide you in the right direction.
Rent vs. buy: There’s no wrong answer!
There’s no denying that the choice to rent or buy is a daunting one. Whichever route you decide to take, StreetEasy is here for you. Visit our renter’s guide and our buyer’s guide for more tips and inspiration.
