In this economic climate, the question of whether to buy or rent remains more perplexing than ever. We talked to local real estate experts to find out what families should think about when deciding whether to continue to rent or take the plunge and invest in a place of their own.
First, consider how long you expect to stay in the city. “It’s been a rule of thumb in Manhattan that if you are not staying for more then five years, you might not want to buy,” says Steve Maschi, vice president at Glenwood Management. “Buying is a much more complex decision that requires an emotional, a psychological and a financial commitment.” Another advantage to renting is that a growing family can upgrade their apartment relatively quickly, “so there’s a flexibility with renting that you don’t have if you buy,” Maschi adds.
Families who aren’t sure which neighborhood might be the best fit can gain insight and experience by renting, says Michael Kaye, CEO of Douglaston Development: “One advantage of renting is the opportunity to experiment with various places, so you can be sure where you want to settle with your family.”
On the other hand, if you’re committed to staying in New York, now might be the time to buy. “If you’re renting, be aware that, over time, if you plan to buy and use financing, a two million dollar place today might be 2.5 million if interest rates go up,” says Deanna Kory, senior vice president at The Corcoran Group. “Also, the mortgage climate is a bit better for people that are buying than it was earlier this year—the banks have loosened up to a degree.”
In recent years, there has been a rise in families choosing to stay in the city long-term. Kelly Kennedy Mack, president at Corcoran Sunshine Marketing Group, expects the trend to continue. “It’s safer, cleaner, and city buyers can now get more space for the money, which perhaps was the reason buyers were choosing to leave for the suburbs in the first place,” Mack says.
The good news for buyers and renters is that both markets are faring better than they have been recently, says Jonathan Miller, president and CEO of Miller Samuel, a real estate appraisal firm. “Whether you’re renting or buying, the change in condition from two years ago is much more favorable for a family looking for a place simply because rents and housing prices are lower,” Miller says.
And although there’s no crystal ball, many experts believe prices have leveled off. “I think there will be flat to modest increases [in 2010], but basically flat,” Kaye says. “The rental and sale prices have fallen pretty much as far as they are going to fall.”
Families looking for great value are encouraged to look in emerging neighborhoods. Kaye suggests looking at West Chelsea, Washington Heights and Williamsburg in Brooklyn. Susan de Franca, president of Related Sales, says more and more families are choosing to call Roosevelt Island home.
“Roosevelt Island draws people because it is five minutes from Midtown, but the price point is anywhere between 30 percent to 40 percent less, and the amenities and views are amazing,” she says.
Families who decide to buy should take advantage of the resources available to them. Mack recommends working with a knowledgeable real estate agent, especially in this climate. “There’s a level of negotiability that has never really been there before—as a result there’s no substitute for working with a real estate professional to help guide you through the process. Websites like StreetEasy.com and PropertyShark.com are good resources, but they just offer data, and there’s a lot of other relevant information,” Mack says. “In the same way, you want to work with the right mortgage broker. There’s absolutely financing available out there, but it’s about finding the right person to help you.”
