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
The right number to compare to rent is the lost costs associated with the buy, your monthlies and tax effected interest payments. That is not a new concept. As of right now, in many cirucmstances (though surely not all) the costs for renting in NY are less than buying a comparable property. You want to argue that pride in ownership and ability to renovate overwhlems that, all good. You want to say that you prefer having your savings invested in an individual property rather than other investment opportunities (including REITs and such), understood. But just making an argument that if you are going to spend that much you would rather own misses the point.
Hence, feel better, northsloperenter. “better living experience” is not what you typed. I’m just trying to clear up the opacity that people see when the pumpers try to say owning is better. Better how? The mentally lazy tend to think ‘financially better’ w/out doing the math.
I agree that owning feels better no matter the cycle (so I’ve heard). There’s nothing like customization.
bxgrl – All numbers are RED. The MAB was an equal opportunity wealth outlet for those who did not get out in time.
***Bill Thompson for Mayor***
“It’s the path to wealth because it’s equity.
Posted by: infinitejester at October 13, 2009 11:45 AM”
but that’s just enforced saving. You could just get your employer to set aside a percentage of your salary and you’d end up with the same net effect (leaving aside the different returns on different types of investments).
It’s the path to wealth because it’s equity, and certainly in Lawrence, KS, a college town, it is less than in Brooklyn. It’s still the Holy Grail in a lot of ways.
we had to sell our place in the spring of 2008 because we found out we were expecting twins and 800 square feet in a walk-up was just going to be too tight. we were very lucky to be able to sell the place for asking and get a much larger (almost twice the size!) rental in an elevator building for a touch more than our mortgage + maintenance.
i love our current apartment. i love the location and the space and the fact that we have a super on call if there’s a problem (our old co-op was a tiny building with no super. in fact, i’d never had a super in 18 years of living in nyc! very easy to get used to.) but i just wish that we owned it. unfortunately, we would never be able to afford something this size and in this condition in this neighborhood (park slope/boerum hill border.)
we are looking to buy again within the next few years, but most likely will not be able to afford to do so in brooklyn. as much as i love it here, we just can’t afford a house in a good school district with a short enough commute to midtown to make it worthwhile.
but, for now, i am very comfortable renting. it’s much easier when all the home related problems are someone else’s and just require a phone call, especially when you have two toddlers.
“spending less than you earn for decades”
But you have to do SOMETHING with what’s left over. Staying in dollars will not guarantee you wealth (i.e. the Lira in Italy – GOLD BABY!!!). And buying in RE before it finishes crashing may not be such a good idea either.
You must stay active (diversify, hedge, etc.).
(Shut up, BHO! What do you know? Stop trolling.)
***Bill Thompson for Mayor***
I would love to see a study that shows the real numbers on how home ownership has impacted people’s wealth. I think there will be a huge gap in the middle where above a certain income level, its positive, and below that level really not so much. In the past I’m sure there would be a much smaller gap but these days?
“Maybe you meant “feel better”.”
I mean, oddly enough, what I typed: “better living experience”
The financial argument for buying is weak. But the “I want to renovate and decorate my home the way I like it and then live there for 20 years” argument is as strong as ever.
I have a nice rental. I’m happy with the place. But I’d be happier if I could gut the bathroom and redo the whole thing.
“The path to wealth in America is…”
spending less than you earn for decades.
But no one will ever ever ever ever admit it.