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
“lost investment of rent”
No such thing during this stage of the cycle.
Big up to fitta, lrlarson and loty. But don’t count your eggs yet, lrlarson (I wish you luck on the closing).
I think this article is real sneaky about how it portrays renting versus buying. It was strategically written in a manner not to piss off the advertisers too much. There’s no particular excerpt I can reference but I just get that sense. Am I alone?
***Bill Thompson for Mayor***
A friend of mine who sold his condo FSBO-style, and had it listed here once and he reminisced to me about the comments, now rents. Reason? Backyard space for his young sons.
The path to wealth in America is home ownership. I am getting closer and closer to buying.
And once again, the Times shows how it’s a paper for elites or that least those who aspire to elitism.
“For 60k per year I would rather own.”
Nonsense. You’re omitting the total net risk of buying in a down market and unexpectingly selling before even a feel-good nominal “return” (but likely real loss). Divide that prospective loss by the months owned and you will likely far exceed 60k per year for the same charm/space/location.
“Now, if you wanted to take that $5k/mo to Brooklyn, maybe you would do better owning.”
No way. You could still lose by the calculation above. A loss is a loss. Maybe you meant “feel better”.
“angry large butted people”
Hmmm…can you please describe the appearance of these people in more detail? I’m trying to get an image in my head of exactly the type of people you speak of.
***Bill Thompson for Mayor***
We’ve come a long way from the days when if you said you wanted to rent you were soundly trounced, or called a bitter renter.
“…over the long run owners win , Hands down.”
But Rosie Perez said…
***Bill Thompson for Mayor***
Hey – this is an article about me. I was looking to buy in Brooklyn but then did the math with insane brooklyn prices and said screw it. Now I’m renting an awesome loft in Financial district 3 minutes walk from work and couldn’t be happier. A friend of mine bought a condo for just over a mil in Park Slope in 2007 and he’s down almost 200k so far in market value. I can rent 5 years for that amount of money and I’m not even counting maintenance and interest that he paid over last 2 years. There is a huge disconnect between rental prices and condo prices with rental winning hands down.
fitta hits the nail on the head, for us at least. When we purchased a few years ago, we simply did not understand what was coming, and put too much of our cash into a large downpayment. Things got tight in my business for the first time in years, and suddenly I was worried about cash flow. We got a surprisingly good offer for our place (we are waiting anxiously for the closing) and, though we’ll miss the pleasures of owning, I will sleep much better knowing we have some significant liquidity.
Last autumn (great timing!), I decided to put my 1BR in Park Slope on the market to look for a 2BR w/ outdoor space somewhere in the greater Brownstone Brooklyn area. Then the markets and economy got even worse, and I resigned myself to staying where I was. To my surprise, in early winter, I ended up with a number of competing bids on my apt. However, by that time, I was uncertain enough about the future of the markets (and my own job!) that I had no desire to invest a huge chunk of savings in an apt that would become difficult to afford if my personal circumstances took a turn for the worse. Plus the really nice apartments were still expensive — sellers didn’t seem to be realistic yet.
On the other hand, I was able to rent a new condo that hadn’t sold, that met all my needs (nice kitchen, outdoor space, close to subway) in Cobble Hill for far less than what I was seeing as mortgage payments on the places on the places I wanted to buy. It wasn’t my dream apt — small bedrooms, shoddy details in some places — but since I wasn’t investing my life savings, I didn’t care. And if something happens to my job, all I have to deal with is a few months on a lease — not worrying about a fire sale in this market. So I sleep much better at night.
Eventually, I’ll be ready to think about buying again. But in the meantime, I’m willing to trade off the lost investment of rent for the flexibility and security of liquidity.
“But not everyone wants to be crammed onto the subway next to angry large butted people with ipod nanos that seem to consider it a personal affront if you want the vacant seat next to them.”
Easy there, NSR.
BTW, I agree with your analysis.