More fodder for New Yorkers questioning the must-own-an-apartment paradigm: The New York Times recently profiled a handful of locals who could, theoretically, purchase an apartment—they have stable jobs, make a good (even great) living to pass a co-op board's rigorous scrutiny, and ostensibly have enough money to cover a down payment—but just decide to rent instead. Not just rent any old apartment, either, but at market rates and, sometimes, luxury prices.
Stephen Ceurvorst, a financier who founded his own firm where he's now managing partner, explains the seemingly wasteful decision to rent as, well, not all that wasteful after all: “This is a generalization, but renting in Manhattan is substantially less expensive than owning,” he tells the paper. He would only say that his month rent for a two-bedroom, two-bath in an amenity-rich Wall Street building falls between $5000 to $10,000, and he could afford to pay twice that, actually, but won't, given that he has a sweet spot as it is. "There isn’t much difference in lifestyle between owning and renting in Manhattan, except that if you pay rent you can spend more on the arts and sports and still have money left over."
And indeed, he might be onto something. As Brick senior contributing editor Lucy Cohen Blatter wrote about in April, "buying a property ties up a lot of money. There's the down payment, the closing costs, the mortgage, and maintenance fees. Those who rent and only have to lay out month-to-month payments can instead take that same amount of money and invest it in the stock market, a mutual fund, or a 401K retirement account." Or, as Ceurvost explained to the Times, use what's left over to enjoy the city.
While it's true that renters are missing out on wealth-building equity, like those who had the prescience to buy in the early aughts when the NYC real estate market hadn't yet reached mind-boggling prices—Harlem, for instance, saw a 102 percent jump in prices from 2004 to 2014, and Williamsburg, 269 percent, per The Real Deal (and based on this PropertyShark map)—the calculus isn't really as simple as it may seem. "In the beginning, you're not building as much equity as you think, since you’re still paying off a large mortgage, and paying very little off the principal," explains financial advisor Avani Ramnani to Brick, who says that though the mortgage interest is tax-deductible, "in the beginning years, a much bigger part of your payment goes to interest than principal. Gradually it reduces, and your tax deductions decrease over time."
In any case, it's more information to consider when deciding to rent versus buy. Besides, as one avowed renter living on the Upper West Side clarified to Brick in 2015, "I don’t mind renting for now because I’m at a stage right now where I need flexibility and also, I’m not sure where exactly I want to 'settle down,' whatever that means. ... I don’t really feel like being tied to one neighborhood, or even one space."
Besides, there's all that avocado toast to buy.
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