NYC mortgage broker here. Don’t listen to real estate agents; it’s obviously in their best interest to advise you to buy. Look at properties that you like, calculate your total housing expense, and compare it to that of renting a comparable property that you like (including the one that you currently occupy since you’re content there). Don’t rely on or expect future appreciation (unless you’re planning to make large capital improvements to the property, but the appreciation generally won’t outweigh the expenditure); it’s a primary residence, not an investment property. Think of owning a primary residence as renting to yourself, but with tax benefits.
Besides costs, factor outside influences, especially future plans (employment, career trajectory, familial changes, and other life circumstances). If you’re planning to have kids in the future, you could save, invest, and grow your money, and plan a purchase in the future to meet your new circumstances and familial plans. Feel free to reach out if I can be of any help.
I agree with you, although I’d add that they should probably exclude the principal part of their mortgage payment when making these calculations. Principal should be treated more like putting money into the bank. Furthermore, OP needs to consider the mortgage interest tax deduction.
I understand what you mean by that, but the principal payment does matter as it's still a part of the monthly housing payment. Also, keep in mind that most of your monthly mortgage payments constitutes as interest; you won't see a 1:1 principal to interest payment until year 20 on a 30-year amortization.
Totally. I just think rent vs. mortgage + common charges/taxes isn't really apples to apples. I.e. $6,000 in rent vs a $6,000 carrying cost for owning are two pretty different things even though the dollar amounts are the same. But you are right to say that from a pure cashflow perspective, they're the same.
For sure. A landlord's operating expenses can make a comparable apartment cheaper to rent than to buy, which is very common in today's post-Covid era of inflated asking prices and high cost to borrow. Plus, NYC makes it very expensive to buy when you factor in mortgage tax (excluding coops) and mansion tax.
IO is actually not common, and IO ARM products have a higher interest rate than a standard ARM with 30-year amortization. IO is more popular with high-end, very expensive properties (super jumbo).
I chose condo because:
* I did not want to go through some stressful interview process, and back and forth. It's more than financials, but really whether you'll jive well with the building folk.
* Be able to do what I want with the condo, when I want. For example, any remodeling, or renting. The latter is very important to me, as I may choose to shift, and do not want to be forced into selling.
My friend has a co-op in Gramercy Park - beautiful. However, so so restrictive. There's little she can do.
But they almost always have restrictions on renting, like you have to live there X number of years before renting, and the renters have to go through approval. If they even allow renters (many I saw did not). Just seems so many hoops...
Some people find those rental restrictions appealing. Some condo buildings are full of renters who don’t really give a shit about quality of life, or their neighbors.
I bought a co-op and the rental restrictions definitely appealed to me - I planned to live there, and did not want a revolving door of tenants. Not to mention that if a building (whether co-op or condo) ends up with too high of ratio of renters to owner-occupied units, it make it harder for potential buyers to get financing. Making it harder to sell.
There are also a few condops in NYC, we have one and couldn’t be happier. It’s a coop with condo rules. Minimal board interference and the benefit of coop pricing, taxes, etc. We can rent it out indefinitely which is great for possible moving on and using it as an investment property later on.
Yes, my phone auto-corrected it. I suspect that most would have understood, after the fact. I have the British English on the phone. Interstingly enough, the American “jibe” is British “gybe”.
The flexibility of renting is priceless. Unless you know you want to be in a certain apartment, in a certain neighborhood, for at least 5+ years, then there are better places to invest your money (see S&P index fund).
Unless you’ve lived in these neighborhoods before, and really liked them, it’s risky to buy in a neighborhood you don’t know. Just rent there for a year or two first and look for a pad to buy if you love it.
Yeah, factoring in selling costs, monthly maintenance and interest. 10 years might be a better ballpark imo. I am moderately stuck where I am due to a rent deal but it's a good problem to have.
Excellent points. I should add that we absolutely love where we live now (also a condo building and love the quality of the unit and location). We went to 5 open houses today and felt meh about most of the locations. Plus, we likely wouldn’t spend 10+ years in the place. I wasn’t sure if the return on something after ~3-5 years would be worth it, but sounds like that’s not quite long enough
ETA: We’ve spoken with several real estate agents who all say to “definitely buy” but obviously their advice is unreliable lol
Real estate agent here. If you're only looking 3-5 years, I would not say it's worth it. You're not in a drastic buyer's market anymore, and it's way too short of a period to recoup your costs. Unless of course prices soar dramatically, but NYC doesn't fluctuate like that
If you want to do a detailed analysis of the financials/opportunity cost, I think the NYT calculator is the best there is:
https://www.nytimes.com/interactive/2014/upshot/buy-rent-calculator.html
You can tell it came out in 2014 because the default interest rate is sub-4%.
ETA: Heres a gift link in case the calculator is paywalled: https://www.nytimes.com/interactive/2014/upshot/buy-rent-calculator.html?unlocked_article_code=1.fU0.4YOG.5-243l5Jgd3G&smid=url-share
I understand that renting a condo unit is way easier than a coop (as a coop shareholder myself), but most 2 bedroom Condo units these days (in Manhattan & northern Brooklyn) have an estimated monthly price of at least 6k a month and aren’t really that big.
Because of the current pricing (and this is mostly for 2BR I’ve researched), I find it hard to justify that renting these units are going to be easy to find a renter when I can usually find something the same size with the same amenities for cheaper (unless you’re willing to put way more down on the apartment lowering the overall monthly payment)
Agree, they are a terrible investment from that standpoint. Which I think everyone is also saying. If you could rent one out for the same or +/- a bit from the monthly cost then it would make a lot more sense.
Absolutely, I don’t understand why anyone would want to rent a 2BR 1BA pre war condo unit that is less than 1000 square feet for 6-7k a month when you can easily find a rental unit that is way bigger or have more amenities at a cheaper price.
Co-op’s have their issues (board interview, rental restrictions, etc) but overall you tend to get WAY more in terms of space and amenities for usually way less in terms of price. Of course they’re typically geared for tenants who want to stay in the same unit for 5+ years though
IMO condos are mostly for people who got in way early at a good/reasonable price, insanely rich and/or bragging rights nowadays.
I’m not sure about “investing your money in an S&P” instead. Wouldn’t it only work if you having the option of free housing? You’re not replacing the rent with the S&P because you still have to pay rent (right?)
Given rates today, if you buy a $1.6M condo, at 20% down (understanding they could put more down, but you don't have to), at a 6.5% interest rate and assuming $3k in monthly common charges and taxes, your monthly payment is $11k, of which $10k is interest and common charges.
If you can rent a $1.6M condo for $10k or less (you can), then your decision is either (1) put $320k down payment on the condo (plus transaction costs, which can easily be another $40k+ which you don't ever get back), or (2) put the $320k in the S&P and rent the apartment, not paying any transaction costs except for broker fee (maybe) and moving costs.
Either way you are living in a $1.6M condo.
Ah I see, you're not replacing the mortgage alone with s&p, you're replacing "everything on top of" the mortgage with the s&p (right?). btw thank you for taking the time to explain.
yep, exactly. it's either pay rent (and invest down payment money somewhere else), or pay interest + common charges (and invest down payment in the property)
I would compare rent to the sunk costs of owning (interest + taxes/common charges). If sunk costs are comparable to renting, then owning may make sense. Plus, OP should factor in the benefit of the mortgage interest tax deduction when making these calculations.
Gambling in the stock market should not be compared to buying your home.
Stock market returns are not a guarantee. We could go into a 20-year Great depression for all we know
For me ,, The return on investment of a house is a place to put your things in . And own by the time one reaches retirement age.
"Price go up" should never be a factor for your primary residence. (In my humble opinion)
Now if you want to gamble.... That's what stocks and crypto are for. Lol
I couldn’t imagine not owning at this point. So many friends who never entered the buyers market are stuck in the never ending cycle of huge rent hikes annually. Rental apartments are more scarce these days due to the increased demand.
This! Buying meant I never had to deal with rent hikes. Watched many friends get priced out of places and have to move and have nothing to show from it. Meanwhile my place appreciated a lot and as the years went on the low and locked in monthly financial responsibility meant I could invest more elsewhere.
If you're planning to have a kid in few years, hold off. When you have kid(s), school district matters. You may want to go to a nicer district or move out of NYC once you see how poor quality the NYC BOE is. At that price, you can buy a very nice house in a very good school district in NJ, Westchester, or Nassau County.
I can’t speak for every school, but it’s never been a problem for me. Came from a poor-ish neighborhood in the Bronx and went to top schools in Bk and Queens from elementary school up to highschool
This is 100% false. Source: have two kids, live in Manhattan. If anyone reads this, do the right thing and make sure you're happy with the school you're zoned for. Some schools will admit you but not your neighbor across the street due to zoning rules.
Having been in your situation and having bought a co-op, I can't say that I regret it because my rate is so low. However, at these current rates, I would have regretted the decision. As someone else mentioned, flexibility is key, and Department of Education (DOE) policies could change school zones, etc. So, I would wait it out by renting. If you look at the NYC market over the last 10 years, it has been stagnant. It's a mature market with low upside.
Don’t discount the non-financial upside of No longer having to worry about renewing a lease, or worrying about how much your landlord will raise the rent. The stability of ownership is priceless.
Factor in increases in taxes and hoa fees and "one off expenses" like facade repairs or hallway upgrades. Also the very expensive and complex closing process and the 6% fee when selling. Lots of slippage to account for eg 1% fee on any property over a mill.... not fun.
Made some sense during ZIRP and sub 2% ARMs but not really now imo
Respectfully,I think you’re missing my point. Everything you’re mentioning is financial. Finances are a huge consideration when buying a home. Most of it even! But it’s not everything.
I have told my story on here before but I bought a condo in Williamsburg in 2014 with my ex and sold in late 2018/early 2019 and it would have been vastly cheaper to rent. Between buying and selling costs, taxes and interest we could have rented a much nicer place for less money. The thing is there are always new condos being built and that keeps prices down, the new buildings are nicer and usually the same prices per square foot. Units in my old building are selling for the same price they were in 2019, so anyone who bought when we did has seen basically 0 appreciation. Rents have gone up in that time but still less than the mortgage at today’s interest rates.
People who bought before prices were at their current state are obviously going to say it was a great decision, is that the future? Who knows
Id say screw Bushwick. Everyone I know who bought in the last decade “because it’s the next Williamsburg” is heavily disappointed. Any newish building is targeted with breakins, open drug deals and violence with 0 police mitigation, it’s just what it always was. For better or worse. I don’t see it becoming a mirror of Williamsburg in another decade like they were convinced
You can get a pretty amazing 2/2 in the UES for 1.3, I don’t see the big deal with Brooklyn but that’s me
I also would not want to buy a shoddy new build condo that was probably built as quickly as possible with as many corners cut as they could get away with. Give me a solid prewar on the UWS any day of the week. Might not be "cool" like Brooklyn/downtown... but it is solid.
oh yeah. My building had to re-do a bunch of the balcony railings that were done half ass, and basement waterproofing issues. All of that went right into our monthly maintenance.
Totally. We saw a brand new build that looked great online ($1.2 million in Bushwick). IRL, it was so shoddy. It took us two seconds to say “nope.” On the other hand, we saw a prewar (but absolutely entirely renovated) condo in Bushwick for $1.4 million and the interior was impeccable and very well designed. But the location was not great.
> I haven’t given the UES enough credit.
UES reached peek carrying costs well over a decade ago. Taxes alone are more than twice per sq.ft than most of the trendy Brooklyn neighborhoods. You will find a lot of listings in UES that have not gained a single dollar in value over the decades. All of the potential appreciation got eaten up by ever ballooning tax and maintenance costs. NY State property tax laws are opaque, weird, and tend to penalize high density housing. Maintenance increases are due to aging housing stock and severe increase in insurance premiums.
Big talking point about buy vs. rent in NYC is about index funds outperforming real estate, significantly so. But how many families actually have taxable brokerage accounts. You open those after you've maxed out all of the tax advantaged accounts. Gaining real estate equity sure beats theoretical gains in accounts that you don't even hold. If you have millions in taxable brokerage accounts, shifting all that money in a non appreciating asset may not make sense. Or it may be a super shrewd move. Perhaps you sense a market adjustment and want to diversify. This is why real estate became stupid expensive in the first place. During the decade plus run of record low interest rates, shifting money into real estate made a lot of sense for the rich. If government is willing to guarantee multi decade mortgages that are sub 3%, you just jump on that and ask questions later. It is free money if you play it right, from tax avoidance to just general financial hedging.
If I was shopping around with 1.6 mil budget, I wouldn't consider either coops or condos. I'd go with single family homes that have ridicilously low tax burdens. But what 1.6 bought you 10 years ago is not even a fraction of what it buys you now. And that's the ultimate contradiction. NYC real estate is a terrible investment yet it keeps ballooning out of control.
One super unique aspect about NYC real estate is that it hasn't crashed since like the 70s. During the great recession, rents and real estate prices stagnated for about 5 years. This is in contrast to many cities that saw their real estate completely implode. Investing here is actually low risk, relatively speaking. Upswing comes down to how adventurous you want to get.
If I was you, I'd look further past Bushwick into Ridgewood. Would not even entertain UES at all.
I would look at Rupert Yorkville towers specifically. Good location between the 456 and Q and the $1500 (for 1200 sqft) HOA fee includes all bills include electricity, which is hard to beat. Most condos will charge you that and you’ll have a hefty electric bill on top of
Past performance is not a guarantee of future performance. Interestingly, one of my wealthy friends sold her condo and went back to renting. I never asked why, though!
I \*wish\* I’d bought a condo instead of a co-op. I’m just adding some info for you to consider as you take in info:
Consider posting this with more details to the /r/financialplanning and/or /r/Henryfinance subreddits to help you evaluate objectively. If you provide clear specifics about salary, savings (allocation to IRAs, HYSA, brokerage, etc), they might be able to give you great advice.
Even with a condo, you might have highly unexpected expenditures. As a renter, you don’t have to necessarily care about assessments to fix an elevator or garden roof or the requirement to switch the fuel type for the boiler. I mention this because your stated mention of $1.6M for a home is close-ish to your $6K per month w/40% down. That would leave you with a temporary dent in your savings and doesn’t leave room for large unexpected expenditures.
>I never asked why, though!
I had a discussion with a friend of mine and we were both saying that since that 2017 tax law, we don't get a benefit anymore for mortgage interest deductions. He made a comment about how he probably should have just stayed a renter since there wasn't much of a benefit to owning.
Potentially - she would have been grandfathered into the previous limits when TCJA went into effect. For sure, net new buyers since then who consider $750K+ properties have another serious factor to consider with this law. I wonder if it will be extended next year??
NYC is a mature market there’s hardly any upside for condos in that price range.
So it’s not a good investment. It’s more like buying an expensive car that will allow you to at best break even if you’re lucky factoring in how many years of HOA and property taxes and closing costs you paid.
For some people at some times, correct. Which is exactly the analogy I'm trying to make. If you have $1,000,000 in the bank what do you care if your condo goes up or down in value? It's a luxury/lifestyle purchase. Same for the Porsche. An Accord will do 80% of what a Panamera will do at a fraction of the price, which for most people is fine.
In the NYC analogy, renting a nice apartment in NYC is the Accord and buying a condo is the Panamera. If you're rich, what else are you going to do with your money anyway?
I don't understand the reply. I've owned both, and I stridently say that a Porsche is better. My comment above is saying that my Porsche is far superior to the Corolla I owned in grad school.
I love acceleration and handling, and I don't hate the prestige of having a nice car, but, for people who don;t care about acceleration or handling, the difference between a Toyota and Porsche might be smaller. I do a lot of midnight driving. The roads are empty. If i were just commuting at rush hour, having a manual might just be an annoyance. Anyhow, the poster used a Panamera. It's still an amazing vehicle, but it's not a 911 S, a GT4, or a GT3.
i have a huge soft spot for the panamera bc its kind of the spiritual successor to the 928 and the 928 is my favorite car (and a gorgeous and amazing one)
I bought my co-op in East Village when several factors seemed to come together for me. Feb 2021 - everybody was leaving Manhattan during Covid, vaccines hadn’t rolled out yet, it was a snowy winter so nobody was looking, 3.1% interest rate, had good bonuses coming in. The price was a great deal (I knew since I had been following prices in my top neighborhoods weekly for about two years), and I stretched my budget as far as I could to make it happen. The co-op process was honestly very difficult and frustrating, but now, several years later, I barely remember it.
Best financial decision I’ve made. Prices have already gone up about 30% in my building from that rare dip, and I’m paying probably $1k less monthly than I would for a comparable apartment right now.
I’ll probably move out when my wife and I have kids, so within 1-3 years. Until then, we’re right where we want to be.
That being said, I don’t know if I’d do the same right now. If I were to only live here for 1-3 years, instead of 4-6, I probably wouldn’t bother, especially with interest rates where they are. I’d likely rent somewhere and invest until it came time to buy a longer-term home for my family (when the time was right).
Why don't you rent then?
In NYC the rent VS buy is upside down in many areas, where the cost of rent is so low compared to purchase it's not smart. Add up the condo fees, taxes, and interest on your 60% loan, then deduct say 5%/year on your 40% for pure bank interest you'd make by simply having it cash savings.
That number could possibly be close to, or more than the rent. At that point your main motivation is hoping property values increase enough to offset this gap plus real estate broker fees (6% of sale price typically) within your timeline. If you plan is to later on move but then rent out the old place, then buying may have higher weight as your "timeline" for owning the property is longer.
The longer you own the property the more it makes sense but if you're thinking short term it could end up being a bad choice.
I have a coop (technically a condop building but resident is run like a coop). There was no stressful interview process. Many buildings are very chill and care 90% about financials and simply whether you seem like you’ll be insane—very easy to pass. The only thing I’m really restricted on is number of pets (2, no weight limits) and number of years I can rent out (2 in 4, no airbnbs). As a result, over 95% of the building is owner occupied and it leads to an extremely community feel. It’s our building and it’s treated well. There’s never messes, our building staff are beloved, and overall it’s extremely quiet and peaceful despite having 130+ units.
Coop saves A LOT of money at closing. At your price range, even if you’re not buying a sponsor unit, it’ll probably save you nearly 90k due to mansion tax and mortgage tax. If you’re buying a sponsor unit, tack on at least another 40k.
I did the math on move in and even if my apartment doesn’t appreciate, I’ll break even on renting in 5 years. I haven’t had a single moment of stress about a landlord, about prices changing, about where I’m going to live, etc. And that to me is worth the commitment.
I did not see anyone mention or if it makes a difference to you.
When buying a condo - you have a deed like a house.
Buying a co-op is buying shares in a company with the right to use that apt in that building.
And also look if the building is on a land lease. Condos don’t have land leases usually. The building usually own the land it’s on out right.
Those are some of the factors to consider.
I’m not really 100 percent sure but I found this old post on street easy saying a bunch of these buildings are on land leases possibly?
But again I’m not well versed in this subject besides a few google searches.
https://streeteasy.com/talk/discussion/28861-complete-list-of-land-lease-buidlings-in-manhattan
But it just something to keep in mind when purchasing a co-op.
Battery park city I found it’s a unique case because the city actually owns the land under them and not a private holding company.
It’s generally a good investment to buy in NYC if you actually can. Meaning if you are stretching yourself with salary, debt, etc and have to take a huge loan, it’s not a great idea because if something happens you’re more quickly screwed than elsewhere. We started looking riiiiiiiight before the pandemic so benefited from pandemic pricing and now pay less on our mortgage than we did in rent for more space, better neighborhood, closer to the things we do and work, etc. Like renting, stay within your budget, really stay within in and if you find a place to buy within that, do it. It’s a solid financial decision in the end.
I pay just over $6k in rent. With a 30% down mortgage, Id be paying over $12k for an inferior condo. $10k for an inferior coop. Im in midtown. I think location factors into this.
Since I am the top comment in that thread, what I'll say is I'd encourage you to look at the places your thinking of buying and look at how much recent rentals are going on for the same buildings. Then think about what it would cost you month right now v.s. renting. No one can answer what is right for you. Given your paying 6k for a 1 bedroom which is significantly above Manhattan median rents for one bedroom, you likely have very particular tastes.
However, I want you to think about this, the going rate for a 3 bedroom in stuytown is 6k and those are usually renovated rent stabilized apartments with luxury finishes (I've lived in one of the peter cooper units, I can vouch for the quality). Remember 40 percent down on a 1. 5million apartment is 600k. A 1 million dollar mortgage payment, at current interest rates is going to be north of 7.5k. Just the down payment of what your talking about spending would be enough to pay rent on a 6k apartment for 8 years
Again while I can't promise you the SP500 will grow at the same rate it did in the future as it does in the past, if you look at average returns over a long horizon its grown at about 10 percent inflation adjusted. If you use the real average rate of capital growth the last 500 years its around 5 percent, inflation adjusted. That says that future value of that 600k down payment invested over 30 years is somewhere else in a ball park of 2.5 million dollars and 10 million dollars in todays dollars. So do you really think what ever your buying would be worth between 5 to 15 million dollars 30 years from now (accounting for inflation, the current property value etc) ? Because that's the opportunity cost of just the down payment of that apartment. Thats not even factor that the mortgage payment probably is more than rent.
A 60% mortgage on 1.6mm is $6,400. And $800/mo of that is principal (equity you’re paying yourself), so your mortgage is closer to $5,600; not 7,500. This figure does not include taxes, CC, or insurance but the rent vs. but calculators NEVER incorporate the principal payments each month
He said 40 percent down, so that is a mortgage 1mm around mortgage which would have a payment around 6500 on most calculators. Then I factored they will ahve monthly hoa that he will ahve to pay on top of this.
Again the salient point of my post was not about the mortgage payment. The salient point is that assuming that the growth rate of capital does not hcange over what it was the past several decades and a more conservative the last 500 years, the future value of that 600k down payment is somewhere in the neighborhood of 2.5 milliion dollars to 10 million dollars. So whatever condo/Co-OP they buy would have to have the property value be worth somewhere in the 5 million to 15 million 30 years from now for that purchase to be worth it from a financial standpoint. That is highly unlikely if you look at how property values typically grow in NYC, where they can actually stay flat for a decade, fall during a recession and on average grow at slower rates then in other property markets. Then add to that Condo and Co-OPs generally show appreciation that is smaller than single property value.
There might be some other value into buying an apartment, i.e. emotional sense of security, but people who understand finance generally understand buying housing in NYC is a poor decision. If you want to be a property as an investment, buy a house and another state and be a land lord. Of course that is a business.
Market-rate rents are unpredictable, so there is some intangible and (backwards looking) tangible/quantifiable value to staying in place for several years. Moving is expensive. That aside, it's annoying and stressful. There is a quantifiable value to that not included in buy-vs-rent calculators. My main point is the buy-vs-rent calculators never fully incorporate all salient numbers; particularly principal and tax credits.
30 years? Way too unpredictable. You have to live somewhere. Assuming you lived in the same place for 30-years, it always makes sense to OWN. In the history of NYC, there has never been a 30-year period where it did not make financial sense to own versus rent.
Avg American lives in their home for 5.5 years. Over 5 years, assuming 8% total return for SPX, 7% mortgage, 1.5%/mo for CC/taxes, and $2k/yr for insurance, 5% brokers' commission on sell-side, the owners' equivalent rent is $6,900/mo. Assuming similar 2-beds rent for $8,500/mo, they need to resell the property at a 15% gain (3%/yr CAGR) to break-even vs. renting. Makes the buy-vs-rent comparison much more favorable.
If you turn the property into a rental upon moving out and do a 1031 exchange, you could indefinitely defer taxes; something impossible in a taxable brokerage.
Only OP can decide what's best for him/herself, but owning is not as bad financially as many in this sub seem to think.
The median 2 Bedroom in Brooklyn is 3600. In Green Point its 4800$, Williasburg 4500, Clinton Hill 4500 Dumbo its 6500. By the time you get to Bushwick where OP is talking about its about 3200.
It took 10 years including covid for rents to rise 50 percent. So please spare me. There are people who look at this data for a living, and the economics of the decision to buy v.s. rent is extremely well studied as its some of the best publicly accessible data. There are very few people with real expertise on this topic that would ever say that it makes financial sense on average in NYC, which is the single most expensive property market in the world in terms of actual $ prices. Of course that isn't everyone situation and there might be situations where someone gets a deal of hte life time, but trying to make arguments about rents might go up outlandish amounts that make it make sense usually mean you've never sat down and worked out the math or looked at the data.
It doesn't even take rocket sciecne to see its generally not worth it. The median asking price on a 2 bedroom apartment in Brooklyn is 1.1 million, while the median rental is 3600. In Manhattan its 1.6M while rental is 5200. The median rental is cheaper than the mortgage payment on the median two bedrrom.
You can learn a lot by actually looking at these numbers : https://streeteasy.com/blog/data-dashboard/?agg=Total&metric=Inventory&type=Sales&bedrooms=Any%20Bedrooms&property=Any%20Property%20Type&minDate=2010-01-01&maxDate=2024-02-01&area=Flatiron,Brooklyn%20Heights
I’m assuming you’ve done the [rent/buy calculator](https://www.nytimes.com/interactive/2014/upshot/buy-rent-calculator.html) and it came up 50/50 about whether it’s a good idea? Those saying it’s *always* a good idea to rent or buy in NYC are both incorrect, as there are simply too many variables to make a blanket statement like that. Flexibility is worth something, but stability is as well. It’s usually the results of the financial calculator that can tip you one way or another.
We bought a single-family home in the Ridgewood/Bushwick area about three years ago with absolutely zero regrets, but again, the variables there are different, because our mortgage rates are comically low and we plan to stay for at least the next 10 years.
I will be honest and no offense! But I would never ever buy a condo in bushwick (live in the area), you’re essentially buying a whole floor to yourself. For that same price you can buy yourself a 3 family home or even a duplex (top floor rental and bottom 2 floors are yours) said condos are contributing to the affordability issue.
At that point just get a house, you can clearly afford one.
100% condo. You can find a good 2 bedroom unit at that price point in Manhattan in Midtown/Uptown. Better investment than hip areas of Brooklyn, which are now (and have been) overpriced.
Just not sure if the common charges & taxes ($$$$ in Manhattan) would be worth it. We’d be paying more than we pay in lower Manhattan rent for sure (even after putting down like $500k which is kind of insane). I’ve also seen a lot of these places decrease in value?! (Based on property history on StreetEasy)
You're not wrong - monthlies can be insane in Manhattan. However, there are no-frills condo buildings out there (sub 2500/month common charges + RE property tax).
Don't view the decreases in value in a vacuum. Consider the whole market: prices have been steady for about 2 years now, but in general, condos account for about 20% of all buildings in NYC (if I recall correctly). There's always a higher demand for condo units simply due to few units in existence, and many people looking for Manhattan have the funds, and opt for condos. All the major brokers release reports - you can google for them to see how condos compare to coops over short and long term.
It's just my personal experience that I see condos selling relatively quickly, while many coop units sit for months. I also see friends buying only condos, and they have the money for it - they don't even consider coops due to their policies.
Owning in the city is usually viewed as a move for control and access.
With a condo or house it’s easier than getting a rental. Sign some papers and wire money. No inspection of your finances or who you are. Good for trust fund kids / nepo kids.
Control in the sense you have more predictable costs compared to market rate rentals, you can make capital improvements at your whim. Etc. You can lock up and leave and have it as your personal nyc hotel.
Access because sometimes you want to be in a particular location and that location means owning.
Real estate is stable in the city, so you can very reliably borrow against it.
Lots of advantages, but appreciation isn’t really one of the big ones.
I live in a co-op and would not consider a condo. My co-op is chill. We do have rental restrictions, which I find very appealing. They keep the building filled with mostly owners who care about the building as opposed to transitory renters. The rules about remodeling are there to keep work in one apartment from negatively affecting other apartments. I.E. You cannot move a wall that has plumbing or gas lines in it as they travel the height of the building to other units. The co-op itself, helps protect us against huge costs when there are necessary renovations as we have a reserve and can take out a line of credit as a building to help defray costs. I have had friends in condos who have been forced to sell because they cannot afford a $50,000 assessment to make a repair. That said, every building is different so be sure to look into the house rules, finances of a building, etc.
I would also not suggest thinking of your primary home as an investment property. While it is an investment and you do hope that you will make more selling it, you should be thinking of it as your home first. It should make financial sense and not be a monthly burden but the buy and flip real estate game can lead you to making choices that won't work well for you just because it is a better investment. Think or purchasing as at least a 10 year lease. Would you like to live there for the next 10 years? If not, don't buy! There is a huge upside to buying. It is a lot of stability, you can renovate (even in co-ops) and make the place yours! 14 years in our co-op and I am still glad that we bought. Our apartment isn't perfect but it is home and we don't have to panic each year about an unaffordable lease renewall.
Hold off on buying right now. The Fed has said they expect to cut rates 3 times this year.
Also, the NAR settlement changes coming in July might cause an increase in supply. (Yes, NAR doesn’t operate in NYC, it’s REBNY, but I expect it to affect NYC anyway). <— if you have no idea what I’m talking about, google “NAR settlement”.
If you wait for the rates to drop to start looking, you'll have to deal with a more competitive market. It doesn't look like op should buy, but if someone else is, start searching and then be ready to move right before (co-op can take a few months so you can adjust your loan prior to closing) the rate drops.
Maybe you’re right, but I don’t think it’s that straightforward. A huge amount of RE is locked up because homeowners are holding 3% mortgages and don’t want to give those up. I think dropping rates entices sellers as much, if not more, than buyers. (Speaking as a current owner who is in this situation).
It most certainly will bring some more sellers to the table, you're right. I think the most common seller to come on board will be the ones looking to upgrade size, or buy a home outside the city so they could take advantage of the lower rate on the buy side as well.
Current inventory is higher than where it's supposed to be but the contract activity has been lower. We need more buyers to balance out the market
The NAR settlement and the lawsuits have been largely overblown by the media. REBNY changed their suggested practices and exclusive agreements to now adhere to the changes that are coming and we don't have an MLS, so that issue of forcing buyer agent commission to list something never existed here.
Ultimately, people have been paying buyer agents commissions for a long time not because they have been forced to do so, but because it makes it much easier to sell your property. That will not change, especially in a market like NYC where the majority of housing is condos and co-ops, where it very much is crucial having an agent guide you through the process
If there were changes coming to seller paid BAC, they would've happened already, but from what I've been seeing for months, almost everything is between 2-3% in Manhattan, Western Queens, and Brooklyn
I am hearing a lot of agents make the same arguments you are making. Maybe you will be right. I personally think buyers are not getting value equal to 3% of purchase price from an agent, so am glad that this will need to be negotiated separately between buyer and their agent. Luckily we won't have to wait long to see what happens one way or the other. New rules begin July of this year.
Discount brokerages have been around for a very long time. There's a reason people don't just go with them now.
>New rules begin July of this year
Not in NYC, that rule is specially for NAR and MLS dominated areas, and has no bearing on the NYC market
Discount brokerages don’t make sense for buyers because the buyer commission has been advertised on MLS, therefore already prearranged with the seller.
With that gone, I expect buyer agents to emerge who take a flat fee or paid hourly like your lawyer. More likely many will forego a buyer agent altogether and the seller agent will have to do more work to move things along.
I understand and already noted that this does not directly impact NYC as it is under control of REBNY. However I do speculate that it will have indirect impacts amid broad changes to the industry in general.
>Discount brokerages don’t make sense for buyers because the buyer commission has been advertised on MLS, therefore already prearranged with the seller
Again, there is no MLS is NYC. Not one that anyone really uses, at least. There are plenty of discount and rebate brokerages now that have existed for decades, and more will pop up. They don't attract people who are actually good at this, that is the problem with them. You get what you pay for, and that's not going to change
>With that gone, I expect buyer agents to emerge who take a flat fee or paid hourly like your lawyer. More likely many will forego a buyer agent altogether and the seller agent will have to do more work to move things along.
I think you are incredibly off base, especially in NYC, but there's no way to know 100% either way so I don't think there's much point to arguing about this. You'll accuse me of being biased, and I will do the same, so let's just leave that one alone as "agree to disagree"
>I understand and already noted that this does not directly impact NYC as it is under control of REBNY. However I do speculate that it will have indirect impacts amid broad changes to the industry in general
Outside on NYC, perhaps but where are we... I believe this is still r/AskNYC lol? It's not r/AskCleveland. God, I hope that's not a thing
I think what you will see is a slight decrease in buyer agent commissions for people in the middle and lower end of the profession. They aren't as good, and won't be able to articulate their value to people, and will accept getting haggled down. The most impactful part of the changes, from my vantage point, seem to that buyers agents in other parts of the country will now need to sign buyer agent agreements and agree on a percentage before they start working with a buyer client. If they agree to 2% and the seller is offering 2.5%, the buyers agent won't be able to claim that extra 2.5%. That's where the savings will come in.
Again, though, all of these options like paying people hourly, going with discount/rebate brokerages, not using buyers agent have been an option for the last 40 or 50 years. They haven't taken hold for a reason. This sea change isn't going to affect that. I think it's major benefit to the market is transparency and avoiding overpaying agents. The best of the best will be able to provide the value that justifies them asking for top dollar. The weaker ones will suffer, and many will leave the business, and I think that's good for everyone
don’t worry about your non existent children. so much changes in NYC with schools even year over year that what’s happening years from now will be different than today- you will figure it out. Brooklynbabyhui is a great group for WB and Greenpoint parents and Bushridge Parents for Bushwick and Ridgewood - both on Facebook. we bought in WB years ago and still love the apartment also sent our kid to a local elementary school and had a great experience.
I’m not trying to be glib but there are calculators online. I think it’s very hard to justify buying in NYC with current interest rates unless you are sitting on a pile of cash. The math simply doesn’t math.
Yes, I love our condo. But, we also bought in 2015 when interest rates were half of what they are today. If I was on the market today, I would stick to renting
I mostly chose condo because that was what was available in my price range. I was also looking a year after the financial crash so new construction condos were getting big price chops. Coops were also somewhat down in price but most of them were older buildings with bad kitchens and I didn't want to feel like I was living in a hotel room. As far as prices go our HOA or maintenance charges aren't much since we don't have a doorman and are a smaller building.
Buying a condo/co-op in Manhattan is probably rarely worth it from an investment standpoint. You buy a place because you want to live there and value what the location has to offer enough to justify the high carrying costs. Very rich people can just live off their investments/trusts/inheritances so probably don’t balk at $5k for monthly maintenance fees.
I bought into a VERY small, think 6 unit total, building as a Condo about ten years back.
It was GREAT - as others have said, renting is a lot easier, but honestly the best part was that everyone really just knew eachother and was committed to making the building better.
Loved it.
As someone who bought not too long ago, don't think of it in terms of investment. Of course, you need to make sure it's financially prudent but you should be buying because you want some level of stability and the ability to make changes to your home.
That said, sure, you can make more money investing in other things, but what the hell are you saving for? For me, it was a home. Savings are a means, not an end. Something to keep in mind.
I bought a condo in Williamsburg in 2021 and don’t regret it at all. Maybe my only regret is that I didn’t stretch my budget and get a two bedroom (I was single at the time, now no longer single). It’s a new build, the interior finishes are luxurious, but the building has no amenities. I purposely chose a no amenity building with no doorman so that common charges are low. Coupled with 2021 interest rates, I pay less all in than to rent a comparable unit. If I did want to rent my apartment out, I expect to break even or cash flow positive $100-200 a month. If the numbers didn’t work out this way though, I don’t think I’d be as pleased with the decision.
Condo buyer here. (and condop buyer before, which is the best of both world,)
Co-op vs. condo doesn't really makes a difference if you buy in a building with an "easy" board (like UWS, Brooklyn, etc). When I say doesn't make a difference, I'm speaking about the probability of being rejected by the board on purchase because you don't have this and this (the big fat wallet). Co-op tends to be cheaper than condos though, so keep that in mind.
But if you buy like in the upper east side, don't do a co-op. Will explain why: people buying in UES co-ops are old people (they were rich and young and successful at some point) who don't understand that those pre-war luxury doorman co-ops have lost value overtime. people with lots of money don't really care anymore being on Park Av' or whatever "pre-war" ultra restrictive UES building. Not only it will be difficult to pass the board to buy, but if you want to sell, it will be even worst. You will be at the mercy of your board (who believes their outdated Emery Roth buildings is the most demanded real estate in the world. it's not).
And speaking of pre-war buildings, for knowing people who have purchased and live in those buildings, it's crap. The plumbery is old and there's leaks all the time, etc.
this message just proved my point about the upper east side! you can't made this up!
[https://www.reddit.com/r/uppereastside/comments/1bkb2n9/comment/kvymox5/](https://www.reddit.com/r/uppereastside/comments/1bkb2n9/comment/kvymox5/?utm_source=share&utm_medium=web2x&context=3)
I just read this entire thread, or at least, the majority of comments and was also looking for what you added u/pastagirls
My question to you this... you've said you're not willing to give up city living, but also that you don't think you'll be here in 30 years. Where do you see your life headed, and how do you want where you live to play out? It seems to me, based on what you said, you'll be here for 10 years, would you say that's correct?
I am a real estate agent, but also, a native New Yorker, I've seen all the ups and downs of the last 40 years, and I don't think it always makes sense to buy. That being said, if your goal is to be here for a while, and you can afford to pull it off, I do think it's a good choice. Someone had said stop viewing this as an investment, I believe it's the mortgage dude I keep seeing around, and I completely agree with him. If you buy, don't think of it as an investment. Is the idea of owning important to you? Do you want to be here long term? Do you see yourself wanting to get out at some point before retirement?
I think if you can't see an expiration date for yourself and NYC, this makes all the sense in the world, but I see this choice boiled down to math only a lot on here, and I think that way of seeing things is really missing the human element part of the equation. Stability is valuable, but there is no clearly defined monetary value for it, but it is worth a lot to many people. Making sure you never need to leave, worth a ton to those who want to be here for a long time, or forever (obviously).
My wife and I are somewhat in the same boat, but really only seriously considering co-ops (and houses in Queens) because we don't see ourselves ever leaving, and we want what we buy to be where we are for 20+ years. I think the benefit of the condo is flexibility and lax rental rules, which in our case don't matter at all. I wouldn't look at this solely as an investment play if you want to be here for a while. This is about what do you value, and I don't know if we really have that answer based on what you've written so far
Hmm. We didn’t buy a condo - we bought a multi-family house in Bushwick. We think it was a great decision.
We get a lot of space (2000+sf, 3br, 2.5ba, backyard garden), plus we have an extra unit (1000+sf, 2br 1ba which we rent out for close to 3k/mo. In 6+ years we’ve made over $200k in rental income.
We previously had a coop in Manhattan. From 2010 to 2017 when we sold, it went up in value from ~$600k to $900k. We’re model citizens so getting approved was a breeze, and there was enough demand when we sold that we picked low risk buyers. The biggest restriction to overcome (we never did) was that the building hypothetically would only allow us to rent to family, no outsiders.
If you’re feeling like playing a little out of the box, rather than a condo you could look into buying a multifamily house in Bushwick/Ridgewood/Stuy Heights. You can still get a 2 family renovated home in the $1.6m range.
Downside is we’re responsible for any repairs/terminator/maintenance + keeping the sidewalk in front clean. No biggie. We live here.
If we wanted to live elsewhere, we could rent our unit too and make a few grand profit each month after mortgage payments and cover costs for someone to do weekly maintenance activities (to make sure garbage and recycling go out on the street).
I suppose if by condo you mean in a large building w/ a doorman, handyman on staff, porters, elevators, shared lounge space, on-site garage. We don’t have that premium experience.
With 40% down, you can def afford it. Someone compared it to SPY return, they are not taking into account tax deductions from interest and appreciation. Someone else said, it's a "mature" market. I'm assuming that means they are saying there won't be much appreciation which I disagree with. NYC Real estate has continuously reached new highs , but ofc no one knows in near term. But long term I'd bet it continues to go up.
I think it boils down to if you think you'll be there 5+ years. And I got condo bc of flexibility and independence and I don't regret it.
Some math for you; you have to judge whether the assumptions embedded within are valid.
https://www.nytimes.com/interactive/2014/upshot/buy-rent-calculator.html
https://old.reddit.com/r/financialindependence/comments/gpx8u4/new_york_times_rent_vs_buy_calculator_in_a/
> https://old.reddit.com/r/financialindependence/comments/gpx8u4/new_york_times_rent_vs_buy_calculator_in_a/
I got lost in this thread and forgot it was linked elsewhere. This is super valuable. A little scary, but valuable lol
In my experience, I've found pros and cons in owning here. We bought at the tail end of the housing market crash so lucked out with a pretty decent deal to which the value of our home has more than doubled since 2011. I can't say whether I like living in a condo more or less than a co-op since I've never lived in a co-op, however we have DO have friends that own a co-op. It was for more easier for us to do renovations like the kitchen and such without dealing with board approvals and when we do decide to sell some day (not in the near future, mind you, this market is insane), we won't need any approvals for that either.
Owning also gives us the piece of mind that our rent won't go up. Our common charges, sure, but those cover building expenses and it's expected that things like that would go up since everything gets more expensive.
Don't worry about school districts too much. When the time comes, you'll just make a list of all the schools you like, add it to the nyc schools site and get accepted to one of them. My daughter goes to a school in our district, but it's definitely not super close. We're on the border of Williamsburg/East Williamsburg and her school is in Greenpoint. We also looked at schools in manhattan and a variety of other areas. It's not a worry.
I, personally, think owning is worth it for the piece of mind of stability, but everyone is different in their priorities. If you're lucky enough to have the money to do it, and you can't imagine living anywhere else, then go for it. But if you can imagine yourself moving out of the city and it's not truly your home. Just invest it elsewhere and leave the home for someone who could use it as a true home and not just an investment, if you get me? Inevitably though, that's up to you and yours.
2010-12 was really the sweet spot for condos. We live in the same area as you and owned from 2014-19. There was no appreciation on our unit and we would have been better off renting. I still get the reports from my old building on sold apartments and the psi is basically the same (nicer units go for more, worse ones go for less). BUT people who bought in 2010-12 (building was completed in 2008 and not sold out until then) have made out like bandits.
It depends on a lot of different factors.
Here is a calculator The NY Times created to help you determine if it’s better long term to buy or rent.
https://www.nytimes.com/interactive/2014/upshot/buy-rent-calculator.html
Obviously it only applies if you actually take the money you would have used as a down payment and to pay off the mortgage and invest it.
If you’re planing to maybe have a child, then you’ll need to think about school districts and/or if you want to stay in the city at all long term. You’ll have LOTS more ‘stuff’ (aka crap, toys, clothes, scooters) laying around, you’ll want access to parks, playgrounds, baby gyms, kids classes, etc.
I would never buy NYC property at the current interest rates, monthly payments + carrying costs are so much higher than rents that it makes zero sense financially. If you want the school district or stability it might be worth it, but an investment it is not.
I used to live in a co-op, the owner offered to sell it to me at a steep discount. Earlier that year a family in California purchased the unit above me for their daughter to live in after she graduated from NYU. It was horrible, constant noise, new puppies, social gatherings, and sex noises with nothing to be done since that's just living life. Had I been stuck with a $1M mortgage for the unit I would've gone insane.
Im in a co-op and very happy. Buying process was ROUGH due to all the financial requirements, but because the board runs such a tight ship, it means it’s a great place to live (quiet neighbors, staff is very responsive and the building is always clean). Air bnbs are aggressively prohibited which Ive been told is not the case in similar condos. I chose one with low monthlies which havent increased much in nearly a decade. It’s all about the particular building you choose.
Co-ops are also cheaper because the approval process is more difficult. Yes, it’s more restrictive than a condo, but as my primary residence I didnt care about things like subletting.
Well we’re relatively new condo owners, but so far so good. Bought Dec 2022.
We have a really lovely pre-war 2br condo in Queens (1240 sq ft, exposed brick, fireplace, walk-in closet, fully renovated & restored kitchen & bathroom), shared rooftop access, gym, garden courtyard with temp parking, security guard etc. We can be in midtown in 20m and have a nice little downtown area.
We do have a very high interest rate (7.5, yep- I know), so our monthly is about $6K with the HOA, taxes, utilities. That said, I’m seeing new construction going for $4k (rentals) in the area for a place that’s not even in the realm of what we bought. The investment feels worth it so far as we plan to stay here forever and not have kids.
Love the ability to customize, have an attentive super and don’t have to worry about major repairs, like a new roof or whatever.
We have found plenty and have already been to open houses with an agent. It’s more about understanding if it’s worth it vs. renting. So far, not looking like it.
IMO 6k a month is a lot to put into an apartment that you can easily get evicted from under the wrong circumstances. If you are planning on staying in one unit for 10+ years then it might be better to own than rent.
I bought a coop to minimize debt and I severely regret it. I would prefer to rent and continue saving for a condo than to buy a coop. The intrusion of the board is stifling and unless you like bored nosey old non-POC deciding what’s appropriate for your life, then I wouldn’t do it.
Honestly nothing that helps too much. With the experience I have had I would not recommend a coop to anyone. The amount of ridiculous outreach I get from the “manager” is insane. It’s like tattletale city with a bunch of old people with no lives and too much time. “Yes Carole, I did use the basement laundry room at 6am that one day. Good to know that someone was so offended by that they emailed you to complain. Thanks for sharing”
I mean if you don’t abide by the co-ops “house rules” (which you receive before buying) then I’m not sure why you would be surprised to be notified. I own in a small co-op. We also have hour limitations on the washer/dryer because there is a unit next to that area and we’ve all agreed (and thus the board passed the rule) that making noise/vibrations before 7am or after 11am isn’t necessary 99.9% of the time and unfairly intrudes on the peace and quiet of that unit, I’ve texted the owner once when our son was a baby to let her know I had an emergency load of baby vomit that I washed at 5am. She was very sweet and said I should never worry about that and she was so grateful for the building’s thoughtfulness in general.
Being a good citizen in a co-op generally pays off and I’m grateful for our vigilant senior owners who make sure the property is protected and kept nicely. 🤷♀️
That sounds lovely and the houses look amazing. I should add that we’re not willing to give up the city lifestyle at all, so moving that far isn’t on the table for us
I’m selling my condo in Bushwick - it’s an AMAZING investment and I’m so sad to be doing so (going through a divorce). The way the neighborhood has changed in the past 2 years is wild - values are only going up. Ping me if you want address to look into it! 2 bed / 2 bath penthouse, 400 sq ft terrace.
Never buy condo in NYC. That's a horrible investment!!!! They never go up in value and HOA fees are dumb. I would invest the money into SP500 or buy somewhere else such as Texas, or Georgia
As someone new to this who only had prior assumptions, I’m so shocked they don’t really go up in value, but it really is looking that way. (Besides long-term ownership or doing a ton of renovations I suppose. But I would only be interested in turnkey properties.) (And you’re right, the HOA fees are a bummer.) We can def buy in Texas or Georgia lol but that is absolutely not for us, so I suppose we’ll continue renting and invest elsewhere. We may decide to later move back to California and buy there, which is a much better value despite how expensive it also is
It is very much a consideration. We don’t come from money, so this chunk of savings is extremely important to us and we want to be careful. (We also make good money, but the thought of saying goodbye to a huge amount at once—for an investment that might not be worth it—is what we’re trying to grapple with.) I guess this is why people with absurd amounts of money buy with all-cash offers in NYC, but that’s not us
Yeh. I’ve done the math in my head enough times to realize that unless this is your forever home, renting and maximizing income to then take and settle elsewhere is the absolute move.
NYC mortgage broker here. Don’t listen to real estate agents; it’s obviously in their best interest to advise you to buy. Look at properties that you like, calculate your total housing expense, and compare it to that of renting a comparable property that you like (including the one that you currently occupy since you’re content there). Don’t rely on or expect future appreciation (unless you’re planning to make large capital improvements to the property, but the appreciation generally won’t outweigh the expenditure); it’s a primary residence, not an investment property. Think of owning a primary residence as renting to yourself, but with tax benefits. Besides costs, factor outside influences, especially future plans (employment, career trajectory, familial changes, and other life circumstances). If you’re planning to have kids in the future, you could save, invest, and grow your money, and plan a purchase in the future to meet your new circumstances and familial plans. Feel free to reach out if I can be of any help.
I agree with you, although I’d add that they should probably exclude the principal part of their mortgage payment when making these calculations. Principal should be treated more like putting money into the bank. Furthermore, OP needs to consider the mortgage interest tax deduction.
I understand what you mean by that, but the principal payment does matter as it's still a part of the monthly housing payment. Also, keep in mind that most of your monthly mortgage payments constitutes as interest; you won't see a 1:1 principal to interest payment until year 20 on a 30-year amortization.
Totally. I just think rent vs. mortgage + common charges/taxes isn't really apples to apples. I.e. $6,000 in rent vs a $6,000 carrying cost for owning are two pretty different things even though the dollar amounts are the same. But you are right to say that from a pure cashflow perspective, they're the same.
For sure. A landlord's operating expenses can make a comparable apartment cheaper to rent than to buy, which is very common in today's post-Covid era of inflated asking prices and high cost to borrow. Plus, NYC makes it very expensive to buy when you factor in mortgage tax (excluding coops) and mansion tax.
Interest-only Jumbo loans are pretty common.
IO is actually not common, and IO ARM products have a higher interest rate than a standard ARM with 30-year amortization. IO is more popular with high-end, very expensive properties (super jumbo).
I chose condo because: * I did not want to go through some stressful interview process, and back and forth. It's more than financials, but really whether you'll jive well with the building folk. * Be able to do what I want with the condo, when I want. For example, any remodeling, or renting. The latter is very important to me, as I may choose to shift, and do not want to be forced into selling. My friend has a co-op in Gramercy Park - beautiful. However, so so restrictive. There's little she can do.
A bit of apples to oranges; Gramercy Park coops are notoriously restrictive. Aside from cond-ops, there are resident friendly coops.
Yeah, most co-ops (especially smaller buildings) are very chill in the interview process—it’s basically a formality.
But they almost always have restrictions on renting, like you have to live there X number of years before renting, and the renters have to go through approval. If they even allow renters (many I saw did not). Just seems so many hoops...
Some people find those rental restrictions appealing. Some condo buildings are full of renters who don’t really give a shit about quality of life, or their neighbors.
I bought a co-op and the rental restrictions definitely appealed to me - I planned to live there, and did not want a revolving door of tenants. Not to mention that if a building (whether co-op or condo) ends up with too high of ratio of renters to owner-occupied units, it make it harder for potential buyers to get financing. Making it harder to sell.
Oh, and some condos ARE getting restrictive about renting - for this reason among others - and rules can change at any time.
This was especially true during Airbnb's heyday. Sharing a wall with an Airbnb sounded like a nightmare.
Banning short-term renters and Airbnbs should be the #1 thing on every HOA's agenda. Airbnb-ers are nightmares.
100% this
Yes, subletting will usually be more restrictive. I just find the interview concerns tend to be overblown.
There are also a few condops in NYC, we have one and couldn’t be happier. It’s a coop with condo rules. Minimal board interference and the benefit of coop pricing, taxes, etc. We can rent it out indefinitely which is great for possible moving on and using it as an investment property later on.
Our board had to approve all remodeling—is that unusual in a condo?
Yes, they do vary and that is a bit of an outlier. Legally they are pretty restricted on what they can do about it though.
The word is “jibe,” not “jive,” FYI.
Yes, my phone auto-corrected it. I suspect that most would have understood, after the fact. I have the British English on the phone. Interstingly enough, the American “jibe” is British “gybe”.
Yes—that’s true. A lot of Americans use “jive” not knowing “jibe” exists.
The flexibility of renting is priceless. Unless you know you want to be in a certain apartment, in a certain neighborhood, for at least 5+ years, then there are better places to invest your money (see S&P index fund). Unless you’ve lived in these neighborhoods before, and really liked them, it’s risky to buy in a neighborhood you don’t know. Just rent there for a year or two first and look for a pad to buy if you love it.
Yeah, factoring in selling costs, monthly maintenance and interest. 10 years might be a better ballpark imo. I am moderately stuck where I am due to a rent deal but it's a good problem to have.
Yes I think 10+ years is a minimum horizon for buying here.
Excellent points. I should add that we absolutely love where we live now (also a condo building and love the quality of the unit and location). We went to 5 open houses today and felt meh about most of the locations. Plus, we likely wouldn’t spend 10+ years in the place. I wasn’t sure if the return on something after ~3-5 years would be worth it, but sounds like that’s not quite long enough ETA: We’ve spoken with several real estate agents who all say to “definitely buy” but obviously their advice is unreliable lol
Agents are 100% useless and are incentivized to get you to buy quickly and pay as much as possible. Avoid them whenever possible.
Real estate agent here. If you're only looking 3-5 years, I would not say it's worth it. You're not in a drastic buyer's market anymore, and it's way too short of a period to recoup your costs. Unless of course prices soar dramatically, but NYC doesn't fluctuate like that
If you want to do a detailed analysis of the financials/opportunity cost, I think the NYT calculator is the best there is: https://www.nytimes.com/interactive/2014/upshot/buy-rent-calculator.html You can tell it came out in 2014 because the default interest rate is sub-4%. ETA: Heres a gift link in case the calculator is paywalled: https://www.nytimes.com/interactive/2014/upshot/buy-rent-calculator.html?unlocked_article_code=1.fU0.4YOG.5-243l5Jgd3G&smid=url-share
This is the most helpful advice on this entire thread. I had a similar question as to OP. And this link helps me make the most objective decision.
I understand that renting a condo unit is way easier than a coop (as a coop shareholder myself), but most 2 bedroom Condo units these days (in Manhattan & northern Brooklyn) have an estimated monthly price of at least 6k a month and aren’t really that big. Because of the current pricing (and this is mostly for 2BR I’ve researched), I find it hard to justify that renting these units are going to be easy to find a renter when I can usually find something the same size with the same amenities for cheaper (unless you’re willing to put way more down on the apartment lowering the overall monthly payment)
Agree, they are a terrible investment from that standpoint. Which I think everyone is also saying. If you could rent one out for the same or +/- a bit from the monthly cost then it would make a lot more sense.
Absolutely, I don’t understand why anyone would want to rent a 2BR 1BA pre war condo unit that is less than 1000 square feet for 6-7k a month when you can easily find a rental unit that is way bigger or have more amenities at a cheaper price. Co-op’s have their issues (board interview, rental restrictions, etc) but overall you tend to get WAY more in terms of space and amenities for usually way less in terms of price. Of course they’re typically geared for tenants who want to stay in the same unit for 5+ years though IMO condos are mostly for people who got in way early at a good/reasonable price, insanely rich and/or bragging rights nowadays.
I’m not sure about “investing your money in an S&P” instead. Wouldn’t it only work if you having the option of free housing? You’re not replacing the rent with the S&P because you still have to pay rent (right?)
Given rates today, if you buy a $1.6M condo, at 20% down (understanding they could put more down, but you don't have to), at a 6.5% interest rate and assuming $3k in monthly common charges and taxes, your monthly payment is $11k, of which $10k is interest and common charges. If you can rent a $1.6M condo for $10k or less (you can), then your decision is either (1) put $320k down payment on the condo (plus transaction costs, which can easily be another $40k+ which you don't ever get back), or (2) put the $320k in the S&P and rent the apartment, not paying any transaction costs except for broker fee (maybe) and moving costs. Either way you are living in a $1.6M condo.
Ah I see, you're not replacing the mortgage alone with s&p, you're replacing "everything on top of" the mortgage with the s&p (right?). btw thank you for taking the time to explain.
yep, exactly. it's either pay rent (and invest down payment money somewhere else), or pay interest + common charges (and invest down payment in the property)
I would compare rent to the sunk costs of owning (interest + taxes/common charges). If sunk costs are comparable to renting, then owning may make sense. Plus, OP should factor in the benefit of the mortgage interest tax deduction when making these calculations.
He said they have enough for a 40% down payment. That has to be out somewhere be it bank or financial markets
Gambling in the stock market should not be compared to buying your home. Stock market returns are not a guarantee. We could go into a 20-year Great depression for all we know
if we get into another great depression, then housing prices will go down as well
True. But you still have a house. You can't live in an index fund or 401k
And a home is a guarantee?
Yes. A guaranteed place to live
As long as you pay property taxes and maintenance lol. I mean as investment return.
For me ,, The return on investment of a house is a place to put your things in . And own by the time one reaches retirement age. "Price go up" should never be a factor for your primary residence. (In my humble opinion) Now if you want to gamble.... That's what stocks and crypto are for. Lol
A house is very different than a condo.
Tell that to everyone with variable mortgage rates back in 2007-2008…
I couldn’t imagine not owning at this point. So many friends who never entered the buyers market are stuck in the never ending cycle of huge rent hikes annually. Rental apartments are more scarce these days due to the increased demand.
This! Buying meant I never had to deal with rent hikes. Watched many friends get priced out of places and have to move and have nothing to show from it. Meanwhile my place appreciated a lot and as the years went on the low and locked in monthly financial responsibility meant I could invest more elsewhere.
If you're planning to have a kid in few years, hold off. When you have kid(s), school district matters. You may want to go to a nicer district or move out of NYC once you see how poor quality the NYC BOE is. At that price, you can buy a very nice house in a very good school district in NJ, Westchester, or Nassau County.
Lol incredible. NYC has some of the best public schools in the country.
And also some terrible ones. In other words, school districts matter.
School districts only really matter if you’re deep in the suburbs of Queens. The government pays for our MTA cards, so it really isn’t a huge issue.
Nah, there are schools where knly local can attend
I can’t speak for every school, but it’s never been a problem for me. Came from a poor-ish neighborhood in the Bronx and went to top schools in Bk and Queens from elementary school up to highschool
This is 100% false. Source: have two kids, live in Manhattan. If anyone reads this, do the right thing and make sure you're happy with the school you're zoned for. Some schools will admit you but not your neighbor across the street due to zoning rules.
Suffolk County too! Or even CT.
Having been in your situation and having bought a co-op, I can't say that I regret it because my rate is so low. However, at these current rates, I would have regretted the decision. As someone else mentioned, flexibility is key, and Department of Education (DOE) policies could change school zones, etc. So, I would wait it out by renting. If you look at the NYC market over the last 10 years, it has been stagnant. It's a mature market with low upside.
Don’t discount the non-financial upside of No longer having to worry about renewing a lease, or worrying about how much your landlord will raise the rent. The stability of ownership is priceless.
Factor in increases in taxes and hoa fees and "one off expenses" like facade repairs or hallway upgrades. Also the very expensive and complex closing process and the 6% fee when selling. Lots of slippage to account for eg 1% fee on any property over a mill.... not fun. Made some sense during ZIRP and sub 2% ARMs but not really now imo
Respectfully,I think you’re missing my point. Everything you’re mentioning is financial. Finances are a huge consideration when buying a home. Most of it even! But it’s not everything.
So increased HOA fees are a financial concern, but increased rent isn't? His point is that property ownership comes with its own set of uncertainties
I have told my story on here before but I bought a condo in Williamsburg in 2014 with my ex and sold in late 2018/early 2019 and it would have been vastly cheaper to rent. Between buying and selling costs, taxes and interest we could have rented a much nicer place for less money. The thing is there are always new condos being built and that keeps prices down, the new buildings are nicer and usually the same prices per square foot. Units in my old building are selling for the same price they were in 2019, so anyone who bought when we did has seen basically 0 appreciation. Rents have gone up in that time but still less than the mortgage at today’s interest rates.
People who bought before prices were at their current state are obviously going to say it was a great decision, is that the future? Who knows Id say screw Bushwick. Everyone I know who bought in the last decade “because it’s the next Williamsburg” is heavily disappointed. Any newish building is targeted with breakins, open drug deals and violence with 0 police mitigation, it’s just what it always was. For better or worse. I don’t see it becoming a mirror of Williamsburg in another decade like they were convinced You can get a pretty amazing 2/2 in the UES for 1.3, I don’t see the big deal with Brooklyn but that’s me
Most of those condos in Bushwick are worth exactly what they were 10 years ago. Maybe less. Look at how long they take to sell, too - like 6+ months
I also would not want to buy a shoddy new build condo that was probably built as quickly as possible with as many corners cut as they could get away with. Give me a solid prewar on the UWS any day of the week. Might not be "cool" like Brooklyn/downtown... but it is solid.
oh yeah. My building had to re-do a bunch of the balcony railings that were done half ass, and basement waterproofing issues. All of that went right into our monthly maintenance.
Totally. We saw a brand new build that looked great online ($1.2 million in Bushwick). IRL, it was so shoddy. It took us two seconds to say “nope.” On the other hand, we saw a prewar (but absolutely entirely renovated) condo in Bushwick for $1.4 million and the interior was impeccable and very well designed. But the location was not great.
Yikes
Super helpful, thank you! I haven’t given the UES enough credit. I’ll take another look.
> I haven’t given the UES enough credit. UES reached peek carrying costs well over a decade ago. Taxes alone are more than twice per sq.ft than most of the trendy Brooklyn neighborhoods. You will find a lot of listings in UES that have not gained a single dollar in value over the decades. All of the potential appreciation got eaten up by ever ballooning tax and maintenance costs. NY State property tax laws are opaque, weird, and tend to penalize high density housing. Maintenance increases are due to aging housing stock and severe increase in insurance premiums. Big talking point about buy vs. rent in NYC is about index funds outperforming real estate, significantly so. But how many families actually have taxable brokerage accounts. You open those after you've maxed out all of the tax advantaged accounts. Gaining real estate equity sure beats theoretical gains in accounts that you don't even hold. If you have millions in taxable brokerage accounts, shifting all that money in a non appreciating asset may not make sense. Or it may be a super shrewd move. Perhaps you sense a market adjustment and want to diversify. This is why real estate became stupid expensive in the first place. During the decade plus run of record low interest rates, shifting money into real estate made a lot of sense for the rich. If government is willing to guarantee multi decade mortgages that are sub 3%, you just jump on that and ask questions later. It is free money if you play it right, from tax avoidance to just general financial hedging. If I was shopping around with 1.6 mil budget, I wouldn't consider either coops or condos. I'd go with single family homes that have ridicilously low tax burdens. But what 1.6 bought you 10 years ago is not even a fraction of what it buys you now. And that's the ultimate contradiction. NYC real estate is a terrible investment yet it keeps ballooning out of control. One super unique aspect about NYC real estate is that it hasn't crashed since like the 70s. During the great recession, rents and real estate prices stagnated for about 5 years. This is in contrast to many cities that saw their real estate completely implode. Investing here is actually low risk, relatively speaking. Upswing comes down to how adventurous you want to get. If I was you, I'd look further past Bushwick into Ridgewood. Would not even entertain UES at all.
it hasn't plummeted because there's no new buildings and demand is still high... those things may not hold true in the future....
I would look at Rupert Yorkville towers specifically. Good location between the 456 and Q and the $1500 (for 1200 sqft) HOA fee includes all bills include electricity, which is hard to beat. Most condos will charge you that and you’ll have a hefty electric bill on top of
Time to start mining bitcoin
Grow weed too.
I would strongly recommend against Yorkville if you’re POC. We moved from there due to ridiculous amount of racism
Which streets and avenues were you living on?
Past performance is not a guarantee of future performance. Interestingly, one of my wealthy friends sold her condo and went back to renting. I never asked why, though! I \*wish\* I’d bought a condo instead of a co-op. I’m just adding some info for you to consider as you take in info: Consider posting this with more details to the /r/financialplanning and/or /r/Henryfinance subreddits to help you evaluate objectively. If you provide clear specifics about salary, savings (allocation to IRAs, HYSA, brokerage, etc), they might be able to give you great advice. Even with a condo, you might have highly unexpected expenditures. As a renter, you don’t have to necessarily care about assessments to fix an elevator or garden roof or the requirement to switch the fuel type for the boiler. I mention this because your stated mention of $1.6M for a home is close-ish to your $6K per month w/40% down. That would leave you with a temporary dent in your savings and doesn’t leave room for large unexpected expenditures.
>I never asked why, though! I had a discussion with a friend of mine and we were both saying that since that 2017 tax law, we don't get a benefit anymore for mortgage interest deductions. He made a comment about how he probably should have just stayed a renter since there wasn't much of a benefit to owning.
Potentially - she would have been grandfathered into the previous limits when TCJA went into effect. For sure, net new buyers since then who consider $750K+ properties have another serious factor to consider with this law. I wonder if it will be extended next year??
In my case it was because the standard deduction amount was doubled. I did better when the interest was an itemized deduction but that's gone.
Ah - got it. Thank you for the additional insight.
NYC is a mature market there’s hardly any upside for condos in that price range. So it’s not a good investment. It’s more like buying an expensive car that will allow you to at best break even if you’re lucky factoring in how many years of HOA and property taxes and closing costs you paid.
Exactly - a Porsche is no better than a Honda but people still buy them. Just don’t pretend it’s an investment
A Porsche is in fact better than a Honda. That’s *why* people buy them
For some people at some times, correct. Which is exactly the analogy I'm trying to make. If you have $1,000,000 in the bank what do you care if your condo goes up or down in value? It's a luxury/lifestyle purchase. Same for the Porsche. An Accord will do 80% of what a Panamera will do at a fraction of the price, which for most people is fine. In the NYC analogy, renting a nice apartment in NYC is the Accord and buying a condo is the Panamera. If you're rich, what else are you going to do with your money anyway?
1mm isn’t enough money to not care about the value of your biggest asset
I used to own a Corolla. Now, I own a 2022 Cayman GTS 4.0 manual. The Porsche is on another planet from the Corolla.
“A Porsche is no better than a Corolla!” -person who has never driven a Porsche
I don't understand the reply. I've owned both, and I stridently say that a Porsche is better. My comment above is saying that my Porsche is far superior to the Corolla I owned in grad school.
I was making fun of the person we are both responding to, I agree with you
I love acceleration and handling, and I don't hate the prestige of having a nice car, but, for people who don;t care about acceleration or handling, the difference between a Toyota and Porsche might be smaller. I do a lot of midnight driving. The roads are empty. If i were just commuting at rush hour, having a manual might just be an annoyance. Anyhow, the poster used a Panamera. It's still an amazing vehicle, but it's not a 911 S, a GT4, or a GT3.
i have a huge soft spot for the panamera bc its kind of the spiritual successor to the 928 and the 928 is my favorite car (and a gorgeous and amazing one)
A front-engine Porsche? Are you also a fan of the Dodo bird and BlackBerrys?
I bought my co-op in East Village when several factors seemed to come together for me. Feb 2021 - everybody was leaving Manhattan during Covid, vaccines hadn’t rolled out yet, it was a snowy winter so nobody was looking, 3.1% interest rate, had good bonuses coming in. The price was a great deal (I knew since I had been following prices in my top neighborhoods weekly for about two years), and I stretched my budget as far as I could to make it happen. The co-op process was honestly very difficult and frustrating, but now, several years later, I barely remember it. Best financial decision I’ve made. Prices have already gone up about 30% in my building from that rare dip, and I’m paying probably $1k less monthly than I would for a comparable apartment right now. I’ll probably move out when my wife and I have kids, so within 1-3 years. Until then, we’re right where we want to be. That being said, I don’t know if I’d do the same right now. If I were to only live here for 1-3 years, instead of 4-6, I probably wouldn’t bother, especially with interest rates where they are. I’d likely rent somewhere and invest until it came time to buy a longer-term home for my family (when the time was right).
Sounds like you absolutely nailed the timing of everything. Well done!
It's always smart if your timeline is long enough (30+ years)
Great point. That is likely not our timeline.
Why don't you rent then? In NYC the rent VS buy is upside down in many areas, where the cost of rent is so low compared to purchase it's not smart. Add up the condo fees, taxes, and interest on your 60% loan, then deduct say 5%/year on your 40% for pure bank interest you'd make by simply having it cash savings. That number could possibly be close to, or more than the rent. At that point your main motivation is hoping property values increase enough to offset this gap plus real estate broker fees (6% of sale price typically) within your timeline. If you plan is to later on move but then rent out the old place, then buying may have higher weight as your "timeline" for owning the property is longer. The longer you own the property the more it makes sense but if you're thinking short term it could end up being a bad choice.
I have a coop (technically a condop building but resident is run like a coop). There was no stressful interview process. Many buildings are very chill and care 90% about financials and simply whether you seem like you’ll be insane—very easy to pass. The only thing I’m really restricted on is number of pets (2, no weight limits) and number of years I can rent out (2 in 4, no airbnbs). As a result, over 95% of the building is owner occupied and it leads to an extremely community feel. It’s our building and it’s treated well. There’s never messes, our building staff are beloved, and overall it’s extremely quiet and peaceful despite having 130+ units. Coop saves A LOT of money at closing. At your price range, even if you’re not buying a sponsor unit, it’ll probably save you nearly 90k due to mansion tax and mortgage tax. If you’re buying a sponsor unit, tack on at least another 40k. I did the math on move in and even if my apartment doesn’t appreciate, I’ll break even on renting in 5 years. I haven’t had a single moment of stress about a landlord, about prices changing, about where I’m going to live, etc. And that to me is worth the commitment.
I did not see anyone mention or if it makes a difference to you. When buying a condo - you have a deed like a house. Buying a co-op is buying shares in a company with the right to use that apt in that building. And also look if the building is on a land lease. Condos don’t have land leases usually. The building usually own the land it’s on out right. Those are some of the factors to consider.
Most coops aren’t on leased land outside of Battery Park City
I’m not really 100 percent sure but I found this old post on street easy saying a bunch of these buildings are on land leases possibly? But again I’m not well versed in this subject besides a few google searches. https://streeteasy.com/talk/discussion/28861-complete-list-of-land-lease-buidlings-in-manhattan But it just something to keep in mind when purchasing a co-op. Battery park city I found it’s a unique case because the city actually owns the land under them and not a private holding company.
After shopping for a few years I would consider myself well versed, but sure tell me I am wrong 🙄
Never said you are wrong but that’s the information out on google. You can search battery park city and their land lease is city owned.
Yes I said most of Battery Park City is land leased, the rest isn’t
It’s generally a good investment to buy in NYC if you actually can. Meaning if you are stretching yourself with salary, debt, etc and have to take a huge loan, it’s not a great idea because if something happens you’re more quickly screwed than elsewhere. We started looking riiiiiiiight before the pandemic so benefited from pandemic pricing and now pay less on our mortgage than we did in rent for more space, better neighborhood, closer to the things we do and work, etc. Like renting, stay within your budget, really stay within in and if you find a place to buy within that, do it. It’s a solid financial decision in the end.
I pay just over $6k in rent. With a 30% down mortgage, Id be paying over $12k for an inferior condo. $10k for an inferior coop. Im in midtown. I think location factors into this.
Since I am the top comment in that thread, what I'll say is I'd encourage you to look at the places your thinking of buying and look at how much recent rentals are going on for the same buildings. Then think about what it would cost you month right now v.s. renting. No one can answer what is right for you. Given your paying 6k for a 1 bedroom which is significantly above Manhattan median rents for one bedroom, you likely have very particular tastes. However, I want you to think about this, the going rate for a 3 bedroom in stuytown is 6k and those are usually renovated rent stabilized apartments with luxury finishes (I've lived in one of the peter cooper units, I can vouch for the quality). Remember 40 percent down on a 1. 5million apartment is 600k. A 1 million dollar mortgage payment, at current interest rates is going to be north of 7.5k. Just the down payment of what your talking about spending would be enough to pay rent on a 6k apartment for 8 years Again while I can't promise you the SP500 will grow at the same rate it did in the future as it does in the past, if you look at average returns over a long horizon its grown at about 10 percent inflation adjusted. If you use the real average rate of capital growth the last 500 years its around 5 percent, inflation adjusted. That says that future value of that 600k down payment invested over 30 years is somewhere else in a ball park of 2.5 million dollars and 10 million dollars in todays dollars. So do you really think what ever your buying would be worth between 5 to 15 million dollars 30 years from now (accounting for inflation, the current property value etc) ? Because that's the opportunity cost of just the down payment of that apartment. Thats not even factor that the mortgage payment probably is more than rent.
A 60% mortgage on 1.6mm is $6,400. And $800/mo of that is principal (equity you’re paying yourself), so your mortgage is closer to $5,600; not 7,500. This figure does not include taxes, CC, or insurance but the rent vs. but calculators NEVER incorporate the principal payments each month
He said 40 percent down, so that is a mortgage 1mm around mortgage which would have a payment around 6500 on most calculators. Then I factored they will ahve monthly hoa that he will ahve to pay on top of this. Again the salient point of my post was not about the mortgage payment. The salient point is that assuming that the growth rate of capital does not hcange over what it was the past several decades and a more conservative the last 500 years, the future value of that 600k down payment is somewhere in the neighborhood of 2.5 milliion dollars to 10 million dollars. So whatever condo/Co-OP they buy would have to have the property value be worth somewhere in the 5 million to 15 million 30 years from now for that purchase to be worth it from a financial standpoint. That is highly unlikely if you look at how property values typically grow in NYC, where they can actually stay flat for a decade, fall during a recession and on average grow at slower rates then in other property markets. Then add to that Condo and Co-OPs generally show appreciation that is smaller than single property value. There might be some other value into buying an apartment, i.e. emotional sense of security, but people who understand finance generally understand buying housing in NYC is a poor decision. If you want to be a property as an investment, buy a house and another state and be a land lord. Of course that is a business.
Market-rate rents are unpredictable, so there is some intangible and (backwards looking) tangible/quantifiable value to staying in place for several years. Moving is expensive. That aside, it's annoying and stressful. There is a quantifiable value to that not included in buy-vs-rent calculators. My main point is the buy-vs-rent calculators never fully incorporate all salient numbers; particularly principal and tax credits. 30 years? Way too unpredictable. You have to live somewhere. Assuming you lived in the same place for 30-years, it always makes sense to OWN. In the history of NYC, there has never been a 30-year period where it did not make financial sense to own versus rent. Avg American lives in their home for 5.5 years. Over 5 years, assuming 8% total return for SPX, 7% mortgage, 1.5%/mo for CC/taxes, and $2k/yr for insurance, 5% brokers' commission on sell-side, the owners' equivalent rent is $6,900/mo. Assuming similar 2-beds rent for $8,500/mo, they need to resell the property at a 15% gain (3%/yr CAGR) to break-even vs. renting. Makes the buy-vs-rent comparison much more favorable. If you turn the property into a rental upon moving out and do a 1031 exchange, you could indefinitely defer taxes; something impossible in a taxable brokerage. Only OP can decide what's best for him/herself, but owning is not as bad financially as many in this sub seem to think.
The Brooklyn 2br the OP is talking about do not rent for $8500/mo.
The median 2 Bedroom in Brooklyn is 3600. In Green Point its 4800$, Williasburg 4500, Clinton Hill 4500 Dumbo its 6500. By the time you get to Bushwick where OP is talking about its about 3200. It took 10 years including covid for rents to rise 50 percent. So please spare me. There are people who look at this data for a living, and the economics of the decision to buy v.s. rent is extremely well studied as its some of the best publicly accessible data. There are very few people with real expertise on this topic that would ever say that it makes financial sense on average in NYC, which is the single most expensive property market in the world in terms of actual $ prices. Of course that isn't everyone situation and there might be situations where someone gets a deal of hte life time, but trying to make arguments about rents might go up outlandish amounts that make it make sense usually mean you've never sat down and worked out the math or looked at the data. It doesn't even take rocket sciecne to see its generally not worth it. The median asking price on a 2 bedroom apartment in Brooklyn is 1.1 million, while the median rental is 3600. In Manhattan its 1.6M while rental is 5200. The median rental is cheaper than the mortgage payment on the median two bedrrom. You can learn a lot by actually looking at these numbers : https://streeteasy.com/blog/data-dashboard/?agg=Total&metric=Inventory&type=Sales&bedrooms=Any%20Bedrooms&property=Any%20Property%20Type&minDate=2010-01-01&maxDate=2024-02-01&area=Flatiron,Brooklyn%20Heights
I’m assuming you’ve done the [rent/buy calculator](https://www.nytimes.com/interactive/2014/upshot/buy-rent-calculator.html) and it came up 50/50 about whether it’s a good idea? Those saying it’s *always* a good idea to rent or buy in NYC are both incorrect, as there are simply too many variables to make a blanket statement like that. Flexibility is worth something, but stability is as well. It’s usually the results of the financial calculator that can tip you one way or another. We bought a single-family home in the Ridgewood/Bushwick area about three years ago with absolutely zero regrets, but again, the variables there are different, because our mortgage rates are comically low and we plan to stay for at least the next 10 years.
A house is the way to go.
I will be honest and no offense! But I would never ever buy a condo in bushwick (live in the area), you’re essentially buying a whole floor to yourself. For that same price you can buy yourself a 3 family home or even a duplex (top floor rental and bottom 2 floors are yours) said condos are contributing to the affordability issue. At that point just get a house, you can clearly afford one.
100% condo. You can find a good 2 bedroom unit at that price point in Manhattan in Midtown/Uptown. Better investment than hip areas of Brooklyn, which are now (and have been) overpriced.
Just not sure if the common charges & taxes ($$$$ in Manhattan) would be worth it. We’d be paying more than we pay in lower Manhattan rent for sure (even after putting down like $500k which is kind of insane). I’ve also seen a lot of these places decrease in value?! (Based on property history on StreetEasy)
You're not wrong - monthlies can be insane in Manhattan. However, there are no-frills condo buildings out there (sub 2500/month common charges + RE property tax). Don't view the decreases in value in a vacuum. Consider the whole market: prices have been steady for about 2 years now, but in general, condos account for about 20% of all buildings in NYC (if I recall correctly). There's always a higher demand for condo units simply due to few units in existence, and many people looking for Manhattan have the funds, and opt for condos. All the major brokers release reports - you can google for them to see how condos compare to coops over short and long term. It's just my personal experience that I see condos selling relatively quickly, while many coop units sit for months. I also see friends buying only condos, and they have the money for it - they don't even consider coops due to their policies.
Owning in the city is usually viewed as a move for control and access. With a condo or house it’s easier than getting a rental. Sign some papers and wire money. No inspection of your finances or who you are. Good for trust fund kids / nepo kids. Control in the sense you have more predictable costs compared to market rate rentals, you can make capital improvements at your whim. Etc. You can lock up and leave and have it as your personal nyc hotel. Access because sometimes you want to be in a particular location and that location means owning. Real estate is stable in the city, so you can very reliably borrow against it. Lots of advantages, but appreciation isn’t really one of the big ones.
I live in a co-op and would not consider a condo. My co-op is chill. We do have rental restrictions, which I find very appealing. They keep the building filled with mostly owners who care about the building as opposed to transitory renters. The rules about remodeling are there to keep work in one apartment from negatively affecting other apartments. I.E. You cannot move a wall that has plumbing or gas lines in it as they travel the height of the building to other units. The co-op itself, helps protect us against huge costs when there are necessary renovations as we have a reserve and can take out a line of credit as a building to help defray costs. I have had friends in condos who have been forced to sell because they cannot afford a $50,000 assessment to make a repair. That said, every building is different so be sure to look into the house rules, finances of a building, etc. I would also not suggest thinking of your primary home as an investment property. While it is an investment and you do hope that you will make more selling it, you should be thinking of it as your home first. It should make financial sense and not be a monthly burden but the buy and flip real estate game can lead you to making choices that won't work well for you just because it is a better investment. Think or purchasing as at least a 10 year lease. Would you like to live there for the next 10 years? If not, don't buy! There is a huge upside to buying. It is a lot of stability, you can renovate (even in co-ops) and make the place yours! 14 years in our co-op and I am still glad that we bought. Our apartment isn't perfect but it is home and we don't have to panic each year about an unaffordable lease renewall.
Hold off on buying right now. The Fed has said they expect to cut rates 3 times this year. Also, the NAR settlement changes coming in July might cause an increase in supply. (Yes, NAR doesn’t operate in NYC, it’s REBNY, but I expect it to affect NYC anyway). <— if you have no idea what I’m talking about, google “NAR settlement”.
If you wait for the rates to drop to start looking, you'll have to deal with a more competitive market. It doesn't look like op should buy, but if someone else is, start searching and then be ready to move right before (co-op can take a few months so you can adjust your loan prior to closing) the rate drops.
Maybe you’re right, but I don’t think it’s that straightforward. A huge amount of RE is locked up because homeowners are holding 3% mortgages and don’t want to give those up. I think dropping rates entices sellers as much, if not more, than buyers. (Speaking as a current owner who is in this situation).
It most certainly will bring some more sellers to the table, you're right. I think the most common seller to come on board will be the ones looking to upgrade size, or buy a home outside the city so they could take advantage of the lower rate on the buy side as well. Current inventory is higher than where it's supposed to be but the contract activity has been lower. We need more buyers to balance out the market
As this thread is showing, the interest rates really kill the current value of owning in NYC. You're paying a LOT for the privilege of not renting.
The rates are a burden on buyer's in a lot of places, not just NYC
The NAR settlement and the lawsuits have been largely overblown by the media. REBNY changed their suggested practices and exclusive agreements to now adhere to the changes that are coming and we don't have an MLS, so that issue of forcing buyer agent commission to list something never existed here. Ultimately, people have been paying buyer agents commissions for a long time not because they have been forced to do so, but because it makes it much easier to sell your property. That will not change, especially in a market like NYC where the majority of housing is condos and co-ops, where it very much is crucial having an agent guide you through the process If there were changes coming to seller paid BAC, they would've happened already, but from what I've been seeing for months, almost everything is between 2-3% in Manhattan, Western Queens, and Brooklyn
I am hearing a lot of agents make the same arguments you are making. Maybe you will be right. I personally think buyers are not getting value equal to 3% of purchase price from an agent, so am glad that this will need to be negotiated separately between buyer and their agent. Luckily we won't have to wait long to see what happens one way or the other. New rules begin July of this year.
Discount brokerages have been around for a very long time. There's a reason people don't just go with them now. >New rules begin July of this year Not in NYC, that rule is specially for NAR and MLS dominated areas, and has no bearing on the NYC market
Discount brokerages don’t make sense for buyers because the buyer commission has been advertised on MLS, therefore already prearranged with the seller. With that gone, I expect buyer agents to emerge who take a flat fee or paid hourly like your lawyer. More likely many will forego a buyer agent altogether and the seller agent will have to do more work to move things along. I understand and already noted that this does not directly impact NYC as it is under control of REBNY. However I do speculate that it will have indirect impacts amid broad changes to the industry in general.
>Discount brokerages don’t make sense for buyers because the buyer commission has been advertised on MLS, therefore already prearranged with the seller Again, there is no MLS is NYC. Not one that anyone really uses, at least. There are plenty of discount and rebate brokerages now that have existed for decades, and more will pop up. They don't attract people who are actually good at this, that is the problem with them. You get what you pay for, and that's not going to change >With that gone, I expect buyer agents to emerge who take a flat fee or paid hourly like your lawyer. More likely many will forego a buyer agent altogether and the seller agent will have to do more work to move things along. I think you are incredibly off base, especially in NYC, but there's no way to know 100% either way so I don't think there's much point to arguing about this. You'll accuse me of being biased, and I will do the same, so let's just leave that one alone as "agree to disagree" >I understand and already noted that this does not directly impact NYC as it is under control of REBNY. However I do speculate that it will have indirect impacts amid broad changes to the industry in general Outside on NYC, perhaps but where are we... I believe this is still r/AskNYC lol? It's not r/AskCleveland. God, I hope that's not a thing I think what you will see is a slight decrease in buyer agent commissions for people in the middle and lower end of the profession. They aren't as good, and won't be able to articulate their value to people, and will accept getting haggled down. The most impactful part of the changes, from my vantage point, seem to that buyers agents in other parts of the country will now need to sign buyer agent agreements and agree on a percentage before they start working with a buyer client. If they agree to 2% and the seller is offering 2.5%, the buyers agent won't be able to claim that extra 2.5%. That's where the savings will come in. Again, though, all of these options like paying people hourly, going with discount/rebate brokerages, not using buyers agent have been an option for the last 40 or 50 years. They haven't taken hold for a reason. This sea change isn't going to affect that. I think it's major benefit to the market is transparency and avoiding overpaying agents. The best of the best will be able to provide the value that justifies them asking for top dollar. The weaker ones will suffer, and many will leave the business, and I think that's good for everyone
don’t worry about your non existent children. so much changes in NYC with schools even year over year that what’s happening years from now will be different than today- you will figure it out. Brooklynbabyhui is a great group for WB and Greenpoint parents and Bushridge Parents for Bushwick and Ridgewood - both on Facebook. we bought in WB years ago and still love the apartment also sent our kid to a local elementary school and had a great experience.
I’m not trying to be glib but there are calculators online. I think it’s very hard to justify buying in NYC with current interest rates unless you are sitting on a pile of cash. The math simply doesn’t math.
Yes, I love our condo. But, we also bought in 2015 when interest rates were half of what they are today. If I was on the market today, I would stick to renting
I mostly chose condo because that was what was available in my price range. I was also looking a year after the financial crash so new construction condos were getting big price chops. Coops were also somewhat down in price but most of them were older buildings with bad kitchens and I didn't want to feel like I was living in a hotel room. As far as prices go our HOA or maintenance charges aren't much since we don't have a doorman and are a smaller building.
Buying a condo/co-op in Manhattan is probably rarely worth it from an investment standpoint. You buy a place because you want to live there and value what the location has to offer enough to justify the high carrying costs. Very rich people can just live off their investments/trusts/inheritances so probably don’t balk at $5k for monthly maintenance fees.
I bought into a VERY small, think 6 unit total, building as a Condo about ten years back. It was GREAT - as others have said, renting is a lot easier, but honestly the best part was that everyone really just knew eachother and was committed to making the building better. Loved it.
As someone who bought not too long ago, don't think of it in terms of investment. Of course, you need to make sure it's financially prudent but you should be buying because you want some level of stability and the ability to make changes to your home. That said, sure, you can make more money investing in other things, but what the hell are you saving for? For me, it was a home. Savings are a means, not an end. Something to keep in mind.
I bought a condo in Williamsburg in 2021 and don’t regret it at all. Maybe my only regret is that I didn’t stretch my budget and get a two bedroom (I was single at the time, now no longer single). It’s a new build, the interior finishes are luxurious, but the building has no amenities. I purposely chose a no amenity building with no doorman so that common charges are low. Coupled with 2021 interest rates, I pay less all in than to rent a comparable unit. If I did want to rent my apartment out, I expect to break even or cash flow positive $100-200 a month. If the numbers didn’t work out this way though, I don’t think I’d be as pleased with the decision.
Condo buyer here. (and condop buyer before, which is the best of both world,) Co-op vs. condo doesn't really makes a difference if you buy in a building with an "easy" board (like UWS, Brooklyn, etc). When I say doesn't make a difference, I'm speaking about the probability of being rejected by the board on purchase because you don't have this and this (the big fat wallet). Co-op tends to be cheaper than condos though, so keep that in mind. But if you buy like in the upper east side, don't do a co-op. Will explain why: people buying in UES co-ops are old people (they were rich and young and successful at some point) who don't understand that those pre-war luxury doorman co-ops have lost value overtime. people with lots of money don't really care anymore being on Park Av' or whatever "pre-war" ultra restrictive UES building. Not only it will be difficult to pass the board to buy, but if you want to sell, it will be even worst. You will be at the mercy of your board (who believes their outdated Emery Roth buildings is the most demanded real estate in the world. it's not). And speaking of pre-war buildings, for knowing people who have purchased and live in those buildings, it's crap. The plumbery is old and there's leaks all the time, etc.
this message just proved my point about the upper east side! you can't made this up! [https://www.reddit.com/r/uppereastside/comments/1bkb2n9/comment/kvymox5/](https://www.reddit.com/r/uppereastside/comments/1bkb2n9/comment/kvymox5/?utm_source=share&utm_medium=web2x&context=3)
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Damn
I just read this entire thread, or at least, the majority of comments and was also looking for what you added u/pastagirls My question to you this... you've said you're not willing to give up city living, but also that you don't think you'll be here in 30 years. Where do you see your life headed, and how do you want where you live to play out? It seems to me, based on what you said, you'll be here for 10 years, would you say that's correct? I am a real estate agent, but also, a native New Yorker, I've seen all the ups and downs of the last 40 years, and I don't think it always makes sense to buy. That being said, if your goal is to be here for a while, and you can afford to pull it off, I do think it's a good choice. Someone had said stop viewing this as an investment, I believe it's the mortgage dude I keep seeing around, and I completely agree with him. If you buy, don't think of it as an investment. Is the idea of owning important to you? Do you want to be here long term? Do you see yourself wanting to get out at some point before retirement? I think if you can't see an expiration date for yourself and NYC, this makes all the sense in the world, but I see this choice boiled down to math only a lot on here, and I think that way of seeing things is really missing the human element part of the equation. Stability is valuable, but there is no clearly defined monetary value for it, but it is worth a lot to many people. Making sure you never need to leave, worth a ton to those who want to be here for a long time, or forever (obviously). My wife and I are somewhat in the same boat, but really only seriously considering co-ops (and houses in Queens) because we don't see ourselves ever leaving, and we want what we buy to be where we are for 20+ years. I think the benefit of the condo is flexibility and lax rental rules, which in our case don't matter at all. I wouldn't look at this solely as an investment play if you want to be here for a while. This is about what do you value, and I don't know if we really have that answer based on what you've written so far
Hmm. We didn’t buy a condo - we bought a multi-family house in Bushwick. We think it was a great decision. We get a lot of space (2000+sf, 3br, 2.5ba, backyard garden), plus we have an extra unit (1000+sf, 2br 1ba which we rent out for close to 3k/mo. In 6+ years we’ve made over $200k in rental income. We previously had a coop in Manhattan. From 2010 to 2017 when we sold, it went up in value from ~$600k to $900k. We’re model citizens so getting approved was a breeze, and there was enough demand when we sold that we picked low risk buyers. The biggest restriction to overcome (we never did) was that the building hypothetically would only allow us to rent to family, no outsiders. If you’re feeling like playing a little out of the box, rather than a condo you could look into buying a multifamily house in Bushwick/Ridgewood/Stuy Heights. You can still get a 2 family renovated home in the $1.6m range. Downside is we’re responsible for any repairs/terminator/maintenance + keeping the sidewalk in front clean. No biggie. We live here. If we wanted to live elsewhere, we could rent our unit too and make a few grand profit each month after mortgage payments and cover costs for someone to do weekly maintenance activities (to make sure garbage and recycling go out on the street). I suppose if by condo you mean in a large building w/ a doorman, handyman on staff, porters, elevators, shared lounge space, on-site garage. We don’t have that premium experience.
With 40% down, you can def afford it. Someone compared it to SPY return, they are not taking into account tax deductions from interest and appreciation. Someone else said, it's a "mature" market. I'm assuming that means they are saying there won't be much appreciation which I disagree with. NYC Real estate has continuously reached new highs , but ofc no one knows in near term. But long term I'd bet it continues to go up. I think it boils down to if you think you'll be there 5+ years. And I got condo bc of flexibility and independence and I don't regret it.
Some math for you; you have to judge whether the assumptions embedded within are valid. https://www.nytimes.com/interactive/2014/upshot/buy-rent-calculator.html https://old.reddit.com/r/financialindependence/comments/gpx8u4/new_york_times_rent_vs_buy_calculator_in_a/
> https://old.reddit.com/r/financialindependence/comments/gpx8u4/new_york_times_rent_vs_buy_calculator_in_a/ I got lost in this thread and forgot it was linked elsewhere. This is super valuable. A little scary, but valuable lol
In my experience, I've found pros and cons in owning here. We bought at the tail end of the housing market crash so lucked out with a pretty decent deal to which the value of our home has more than doubled since 2011. I can't say whether I like living in a condo more or less than a co-op since I've never lived in a co-op, however we have DO have friends that own a co-op. It was for more easier for us to do renovations like the kitchen and such without dealing with board approvals and when we do decide to sell some day (not in the near future, mind you, this market is insane), we won't need any approvals for that either. Owning also gives us the piece of mind that our rent won't go up. Our common charges, sure, but those cover building expenses and it's expected that things like that would go up since everything gets more expensive. Don't worry about school districts too much. When the time comes, you'll just make a list of all the schools you like, add it to the nyc schools site and get accepted to one of them. My daughter goes to a school in our district, but it's definitely not super close. We're on the border of Williamsburg/East Williamsburg and her school is in Greenpoint. We also looked at schools in manhattan and a variety of other areas. It's not a worry. I, personally, think owning is worth it for the piece of mind of stability, but everyone is different in their priorities. If you're lucky enough to have the money to do it, and you can't imagine living anywhere else, then go for it. But if you can imagine yourself moving out of the city and it's not truly your home. Just invest it elsewhere and leave the home for someone who could use it as a true home and not just an investment, if you get me? Inevitably though, that's up to you and yours.
2010-12 was really the sweet spot for condos. We live in the same area as you and owned from 2014-19. There was no appreciation on our unit and we would have been better off renting. I still get the reports from my old building on sold apartments and the psi is basically the same (nicer units go for more, worse ones go for less). BUT people who bought in 2010-12 (building was completed in 2008 and not sold out until then) have made out like bandits.
It depends on a lot of different factors. Here is a calculator The NY Times created to help you determine if it’s better long term to buy or rent. https://www.nytimes.com/interactive/2014/upshot/buy-rent-calculator.html Obviously it only applies if you actually take the money you would have used as a down payment and to pay off the mortgage and invest it.
If you’re planing to maybe have a child, then you’ll need to think about school districts and/or if you want to stay in the city at all long term. You’ll have LOTS more ‘stuff’ (aka crap, toys, clothes, scooters) laying around, you’ll want access to parks, playgrounds, baby gyms, kids classes, etc.
I would never buy NYC property at the current interest rates, monthly payments + carrying costs are so much higher than rents that it makes zero sense financially. If you want the school district or stability it might be worth it, but an investment it is not. I used to live in a co-op, the owner offered to sell it to me at a steep discount. Earlier that year a family in California purchased the unit above me for their daughter to live in after she graduated from NYU. It was horrible, constant noise, new puppies, social gatherings, and sex noises with nothing to be done since that's just living life. Had I been stuck with a $1M mortgage for the unit I would've gone insane.
Life is funny
Im in a co-op and very happy. Buying process was ROUGH due to all the financial requirements, but because the board runs such a tight ship, it means it’s a great place to live (quiet neighbors, staff is very responsive and the building is always clean). Air bnbs are aggressively prohibited which Ive been told is not the case in similar condos. I chose one with low monthlies which havent increased much in nearly a decade. It’s all about the particular building you choose. Co-ops are also cheaper because the approval process is more difficult. Yes, it’s more restrictive than a condo, but as my primary residence I didnt care about things like subletting.
We didn’t care and ended up buying a co op, which is not very restrictive. We can rent after two years but we’re probably here for life!
Following
Well we’re relatively new condo owners, but so far so good. Bought Dec 2022. We have a really lovely pre-war 2br condo in Queens (1240 sq ft, exposed brick, fireplace, walk-in closet, fully renovated & restored kitchen & bathroom), shared rooftop access, gym, garden courtyard with temp parking, security guard etc. We can be in midtown in 20m and have a nice little downtown area. We do have a very high interest rate (7.5, yep- I know), so our monthly is about $6K with the HOA, taxes, utilities. That said, I’m seeing new construction going for $4k (rentals) in the area for a place that’s not even in the realm of what we bought. The investment feels worth it so far as we plan to stay here forever and not have kids. Love the ability to customize, have an attentive super and don’t have to worry about major repairs, like a new roof or whatever.
Also, condos seem impossible to find. Everything is a co-op…
We have found plenty and have already been to open houses with an agent. It’s more about understanding if it’s worth it vs. renting. So far, not looking like it.
IMO 6k a month is a lot to put into an apartment that you can easily get evicted from under the wrong circumstances. If you are planning on staying in one unit for 10+ years then it might be better to own than rent.
I bought a coop to minimize debt and I severely regret it. I would prefer to rent and continue saving for a condo than to buy a coop. The intrusion of the board is stifling and unless you like bored nosey old non-POC deciding what’s appropriate for your life, then I wouldn’t do it.
Just put an offer to a co-op, what should else should I consider or ask them before going all in?
Honestly nothing that helps too much. With the experience I have had I would not recommend a coop to anyone. The amount of ridiculous outreach I get from the “manager” is insane. It’s like tattletale city with a bunch of old people with no lives and too much time. “Yes Carole, I did use the basement laundry room at 6am that one day. Good to know that someone was so offended by that they emailed you to complain. Thanks for sharing”
I mean if you don’t abide by the co-ops “house rules” (which you receive before buying) then I’m not sure why you would be surprised to be notified. I own in a small co-op. We also have hour limitations on the washer/dryer because there is a unit next to that area and we’ve all agreed (and thus the board passed the rule) that making noise/vibrations before 7am or after 11am isn’t necessary 99.9% of the time and unfairly intrudes on the peace and quiet of that unit, I’ve texted the owner once when our son was a baby to let her know I had an emergency load of baby vomit that I washed at 5am. She was very sweet and said I should never worry about that and she was so grateful for the building’s thoughtfulness in general. Being a good citizen in a co-op generally pays off and I’m grateful for our vigilant senior owners who make sure the property is protected and kept nicely. 🤷♀️
Avoid coops, rent and save for a condo or house. Theres a reason the concept of coops are largely unknown even in pricey housing markets.
Buy a home in westchester - that's what my wife and I did. 5min walk to the metro north, 5 min walk to midtown bus, 15 min walk to the actual subway.
That sounds lovely and the houses look amazing. I should add that we’re not willing to give up the city lifestyle at all, so moving that far isn’t on the table for us
I was about to let you know Westchester is beautiful but it is NOT the city. Way less going on and way more car based.
I’m selling my condo in Bushwick - it’s an AMAZING investment and I’m so sad to be doing so (going through a divorce). The way the neighborhood has changed in the past 2 years is wild - values are only going up. Ping me if you want address to look into it! 2 bed / 2 bath penthouse, 400 sq ft terrace.
Never buy condo in NYC. That's a horrible investment!!!! They never go up in value and HOA fees are dumb. I would invest the money into SP500 or buy somewhere else such as Texas, or Georgia
As someone new to this who only had prior assumptions, I’m so shocked they don’t really go up in value, but it really is looking that way. (Besides long-term ownership or doing a ton of renovations I suppose. But I would only be interested in turnkey properties.) (And you’re right, the HOA fees are a bummer.) We can def buy in Texas or Georgia lol but that is absolutely not for us, so I suppose we’ll continue renting and invest elsewhere. We may decide to later move back to California and buy there, which is a much better value despite how expensive it also is
Never worth buying, unless money isn’t much of a consideration
It is very much a consideration. We don’t come from money, so this chunk of savings is extremely important to us and we want to be careful. (We also make good money, but the thought of saying goodbye to a huge amount at once—for an investment that might not be worth it—is what we’re trying to grapple with.) I guess this is why people with absurd amounts of money buy with all-cash offers in NYC, but that’s not us
Yeh. I’ve done the math in my head enough times to realize that unless this is your forever home, renting and maximizing income to then take and settle elsewhere is the absolute move.
Appreciate that!