Buying vs. renting in New York City. Which one is better for you?

To rent or to buy is an ultimate question that does not have one correct answer. Renting provides you with the flexibility to move whenever you need, and it does not require a large down payment. On the flip side, if you decide to buy a home, it could turn into a great long-term investment that will help you build equity and receive tax benefits. 

New York is a city of renters. The share of New Yorkers who live in rental units reached nearly 70 percent in 2019, according to the Furman Center. Generally, renting is considered to be more affordable than buying. In addition, the growing mortgage rates might also demotivate some people from entering the sales market. 

Let’s take a look at this 3-bedroom, 2-bathroom co-op in Lincoln Square. Currently, the unit is listed for $1.3 million. If the future owner takes out a 30-year loan with a 25 percent down payment and 5.25 percent interest rate, they will pay about $7,329 a month. For comparison, the 2-bedroom, 2-bathroom rental unit in this neighborhood is on the market for $7,800. Similar 3-bedroom units are listed for $10,475 a month or above. 

The recent jump in NYC rents might make owning a home more attractive than signing a lease. Buying in an up-and-coming neighborhood is a great investment: you can receive rental returns or sell a property for a higher price after three to five years. Moreover, your monthly mortgage payment will go toward ownership. You can also qualify for mortgage and property tax breaks. 

Resources: 

“State of Renters and Their Homes,” (NYU Furman Center)