4 ms·

I’ll tell you two cities the OP could be in right now: SF and NYC. Lived in both, tried to buy in both, gave up both times because the numbers were silly. Neit

by irq11 7y ago

I’ll tell you two cities the OP could be in right now: SF and NYC. Lived in both, tried to buy in both, gave up both times because the numbers were silly. Neither one makes much sense from a rent/buy perspective. New York is closer, but most properties are still cash-flow negative relative to rent. You have to assume unrealistic rates of appreciation and/or indefinite tax deductions for the numbers to work (and folks are finding out, right now, that those deductions can go away!) People have been treating homes like investment vehicles for a while now, and there are actually very few big cities in the US where rental rates can cover costs of mortgage, taxes and insurance. Renting literally puts cash in your pocket.

CydeWeys 7y ago
I'm renting in Manhattan right now and this is absolutely the case for me. At the same monthly cost, I'd have to live farther out in a less desirable location. A lot of apartments cost more to own in monthly taxes and fees than my entire monthly rent cost when I first moved here (though admittedly I had roommates). Note, I'm not talking about a mortgage; that'd be way more. I'm just talking about coop fees. You can spend more on them buying an apartment than it costs to rent a bedroom in a shared apartment. And as people like to say about rent, that is also just "throwing money away".
- irq11 7y ago
  I don’t think it’s fair to compare renting a room to buying an apartment (even a studio), but you don’t need to do that. Right now, most properties in manhattan rent for less than their monthly carrying costs (including HOA fees). People have traditionally justified it via the mortgage interest and SALT tax deductions, but congress just blew the latter all to hell, and it’s making properties about 30% too expensive... So many units have priced in the SALT tax deductions! The rent/buy calculation was borderline before, but now it’s just comically bad.
cletus 7y ago
Speaking as someone who lives in Manhattan and owns my apartment, I can say from my example at least that my mortgage payment (plus property taxes), tax-adjusted, is less than what the same apartment would cost me to rent. Now buying something to rent it out is a different story and I just don't see those numbers making sense from an investment POV if that's your point.
- irq11 7y ago
  My point is that right now, for most units, it’s financially smarter to rent in Manhattan. It’s not even close. I’ve been doing a search in Manhattan this spring. On nearly every property I see, mortgage + hoa / taxes + insurance easily exceeds equivalent monthly rent. And not by a little bit, but by hundreds of dollars a month. Deduct mortgage interest and $10k of SALT, and a few properties (~10%) start to make sense on a 5-10 year timeframe. Most are nowhere close to affordable. Factor in opportunity cost at any reasonable long-term rate of return, and nothing makes sense (You basically have to assume that the stock market will underperform, and the housing market will over-perform to make the numbers work.) The few properties that make sense on a spreadsheet sell quickly. Most linger. Ask any real estate agent - the market is shifting, and the shift reflects the fact that prices got ahead of fundamentals. So it depends strongly on when you bought and how rare your deal was, but these days, the vast majority of the Manhattan market is overpriced, and implicitly betting on speculative price appreciation.

by irq11 7y ago

CydeWeys 7y ago

I'm renting in Manhattan right now and this is absolutely the case for me. At the same monthly cost, I'd have to live farther out in a less desirable location. A lot of apartments cost more to own in monthly taxes and fees than my entire monthly rent cost when I first moved here (though admittedly I had roommates). Note, I'm not talking about a mortgage; that'd be way more. I'm just talking about coop fees. You can spend more on them buying an apartment than it costs to rent a bedroom in a shared apartment. And as people like to say about rent, that is also just "throwing money away".

irq11 7y ago
I don’t think it’s fair to compare renting a room to buying an apartment (even a studio), but you don’t need to do that. Right now, most properties in manhattan rent for less than their monthly carrying costs (including HOA fees). People have traditionally justified it via the mortgage interest and SALT tax deductions, but congress just blew the latter all to hell, and it’s making properties about 30% too expensive... So many units have priced in the SALT tax deductions! The rent/buy calculation was borderline before, but now it’s just comically bad.

cletus 7y ago

Speaking as someone who lives in Manhattan and owns my apartment, I can say from my example at least that my mortgage payment (plus property taxes), tax-adjusted, is less than what the same apartment would cost me to rent. Now buying something to rent it out is a different story and I just don't see those numbers making sense from an investment POV if that's your point.

irq11 7y ago
My point is that right now, for most units, it’s financially smarter to rent in Manhattan. It’s not even close. I’ve been doing a search in Manhattan this spring. On nearly every property I see, mortgage + hoa / taxes + insurance easily exceeds equivalent monthly rent. And not by a little bit, but by hundreds of dollars a month. Deduct mortgage interest and $10k of SALT, and a few properties (~10%) start to make sense on a 5-10 year timeframe. Most are nowhere close to affordable. Factor in opportunity cost at any reasonable long-term rate of return, and nothing makes sense (You basically have to assume that the stock market will underperform, and the housing market will over-perform to make the numbers work.) The few properties that make sense on a spreadsheet sell quickly. Most linger. Ask any real estate agent - the market is shifting, and the shift reflects the fact that prices got ahead of fundamentals. So it depends strongly on when you bought and how rare your deal was, but these days, the vast majority of the Manhattan market is overpriced, and implicitly betting on speculative price appreciation.