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Rent or Buy? Buying and renting offer the same pros and cons in New York City as in the rest of the country. There are a few different variables involved with good ol' NYC – and we will get into them a little bit later – but the most important thing is to understand the costs and benefits of each housing strategy in a clear, easily categorizable way. That way, the right decision becomes an easy matter of weighing two sets of several different factors against each other, and then asking yourself which way is best for you. Let's first divide the pros and cons into two main categories: financial considerations and lifestyle concerns. Talking strictly about finances first, if you can afford it, buying is almost always the better long-term investment. Barring obscene interest rates, much of your monthly mortgage payment is will come back to you in the form of the value of the home when you eventually sell it. Rent payments, as most of us get to feel deep down in the gut once a month, are basically just throwing money out the window. Furthermore, the federal tax structure is tilted heavily in favor of home ownership – social security and that part of the tax code are basically the only two last vestiges of a civilized country's social policies that we have left in the U.S... The federal government subsidizes a huge part of home ownership by making most mortgage payments tax deductible. There are two financial downsides to home ownership. First, if there is any real chance of you defaulting on your debt, then you should keep in mind that doing so can ruin you financially for a good chunk of your life – and don't get cocky when considering the likelihood of this possibility, Mr. Financial Superman, unforeseen events can put you in extreme financial jeopardy. Relatedly, don't get sucked into a high-interest loan. Owning a home is a lot of work, and if your paying almost as much in interest as you would have been in rent, then it's just not worth it. Now, let's talk lifestyle concerns. Take it from someone who has both studied a whole lot of economics and has been worked into the ground as a teenager by two parents who owned a home that required a lot of fixing up: The real main drawbacks to home ownership aren't financial, they are practical. While you might gain a lot financially, you lose a lot in terms of mobility. Owning a home is a lot of work, and you can't just rent the place and go gallivanting off around the world. In New York City, two main things make owning a home more desirable than elsewhere: First of all, everything involving housing in the city is very expensive. That means that the financial benefits of home ownership are proportionally more important. Secondly, demand for New York City housing is expected to continue to rise for quite some time. The limited size of the city in comparison to the growing population means that property values are likely to increase, making home ownership in the city a safer than usual investment. If you can afford it, and you know you are going to be in the city for a while, home ownership is probably the way to go. But the best colloquialism to apply to home ownership everywhere should be stressed in New York City even more strongly: Never, ever, bite off more than you can chew.
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