To Own or to Rent?
Over the weekend The New York Times profiled a series of co-op or condo owners who became renters either due to the market downturn, size requirements, or both. The article begins, for example, with a family of four that moves from an 850-square-foot Upper East Side two-bedroom, one-bathroom co-op to an Upper East Side rental—three…
Over the weekend The New York Times profiled a series of co-op or condo owners who became renters either due to the market downturn, size requirements, or both. The article begins, for example, with a family of four that moves from an 850-square-foot Upper East Side two-bedroom, one-bathroom co-op to an Upper East Side rental—three bedrooms, three bathrooms, and 1,400 square feet for $5,200 per month. The praises sung for renterhood include: freedom from responsibility and anxiety, fewer financial requirements, more space, and sometimes more amenities. Some of those profiled in the article, however, miss ownership: the camaraderie in the building, the freedom to renovate and customize, the autonomy of ownership. Those profiled are primarily individuals, couples, or families who live in expensive Manhattan neighborhoods like the Upper East Side, the Upper West, or Greenwich Village—people who can afford rents of $5,000. It would be interesting to hear from readers with a wider range of incomes and locations. For example, has anyone out there had a similar experience in Brooklyn, where you have recently sold a house or apartment (either by choice or necessity) in order to become a renter?
Owners No More [NY Times]
Image by Mark Ovaska
I sold my Queens coop in Jan. 2008 and moved to a rental in Bushwick. A month ago, we closed on a house in Bed Stuy.
I had to sell my coop because of financial reasons relating to a divorce. And also because I didn’t want to live there — the place was a compromise with my ex.
The timing was lucky. I benefitted from the boom and bust. My coop increased in value 40 percent the first year I owned it. Prices where I bought decreased 20 to 40 percent during 2007.
It could have turned out differently. I tried to move from my coop to another in 2007, but didn’t qualify for two mortgages. I would have paid 20 percent more to live in Bushwick, but couldn’t find the right place.
Maybe I’ve just been lucky with all my landlords, but I haven’t felt at anyone’s mercy in all the years I’ve been renting. Renting or owning is a decision everyone makes for themselves and based on their own circumstances. My only objection is those who try to make it into a judgement call on what people are – or are not.
BHO–I hear you, its more fun to make bold statements than measured appraisals. And no you don’t have that much power, as it seems you have figured out over time thankfully. But really what you have figured out is that a friendly bear makes more friends and has more sway than a wildly swinging and aggressive one.
renting seems so transient (unless have RS apt). I would feel my home is so temporary if I rented after owning for so long. Not really my home. That is great for a season- like couple months in warm climate but otherwise I would advise renting to save up to buy…which means rent a place that allows you to put $$$ in bank each month.
That means NOT some new construction highrise doorman bldg.
“He’s not pissing his money away in rent.”
Apparently, he’s not shitting it away in an underwater mortgage neither.
***Bill Thompson for Mayor***
Oh, by “height of the market” I thought you meant at a prevailing price. So you didn’t refi your liability up to peak comps (coop probably wouldn’t let you anyway, would it?).
***Bill Thompson for Mayor***
He’s not pissing his money away in rent.
BHO, even financially I win. I got it way undermarket directly from the sponsor of my coop. It was unoccupied for 10 years and was in non-livable condition and I brought it up to more than livable condition.
I am a personal anecdote though. I know what you’re saying, quiet a few will lose out. I still think that over years, real estate is a sound investment. We can keep on going back and forth but we both have jobs and I would like to keep mine (not for the financial sense BTW but for the fact that I actually love what I do for a living).
“Wasder is right that none of us can predict it”
You mean no one can KNOW it. You can predict all you want. You have to predict. It’s the essence of science, mathematics, personal finance, investing and buying a house.
“I will always be able to cash out and recoup what I spent for reno and downpayment even if my apartment falls another 35% or so.”
How? If you put 20% down, you’ve already lost 75% of your deposit ALONE let alone reno cost (assuming the typical case where you haven’t chipped away at principal yet). Leveraging is just as devestating as it is powerful. You have to divide this loss (actually larger even after tax advantages and writeoff considering reno) by the months between purchase and resale and THEN compare it to renting. Financially, you lose. Emotionally, you might win.
***Bill Thompson for Mayor***