Is It Worth It to Buy a Home In NYC?
“Even if I decide to buy a home in NYC, how do I know that it’ll actually be worth it?”
This is one of the questions I get asked often from potential buyers. And it’s a tough question to answer because it depends on what you mean by “worth it.”
Do you mean peace of mind and stability?
Or do you mean in terms of investment performance over time?
Let’s take a look at both.
From a more “personal” standpoint, you should think about your needs for the future when trying to figure out if it makes sense for you to buy a home in NYC.
Where Do You See Yourself in 5 to 10 Years?
Is New York where you really want to put down roots? Or is there a good chance that you’ll be skipping off to a new city (or country) in the not too distant future?
Home ownership certainly has many benefits, but if it’s highly likely that you’ll need to move within a few years, buying may not make sense.
How much space do you think you’ll need in the near term and over the next five years or more? Is it likely to just be you or will you need room for more people?
If you can afford a place that would give you room to grow, then that’s a good sign that buying may make sense for you. But if you’d need to trade up to a bigger space within a short amount of time, you may be better off waiting until you can buy a larger home.
Finally – what’s the situation with your income and assets? If you feel confident that your income and assets are going to remain the same or increase over the next few years, then you have a green light to consider buying a place. But if you’re contemplating a major change which could cause your income or assets to decrease significantly or become less stable, then you may need to rethink whether or not having a mortgage will work for you.
Renting vs Buying
Think very carefully about the “rent vs. buy” equation.
Owning a home is a wonderful goal to have and an amazing accomplishment. But that doesn’t mean it doesn’t come with some drawbacks. Owning does not always beat out renting. There are, in fact, circumstances where it makes better financial sense to remain a renter. You can learn more by checking out this post on the subject – The (Sometimes Unexpected) Benefits and Drawbacks of Renting.
Market Based Questions
Understanding how prices have appreciated over time can help you figure out whether or not buying a home could prove to be a good investment for you.
Keep in mind that past performance is no guarantee of future performance. Real estate does go up over time, but it’s not always linear. There’s frequently periods where prices will decrease for at least 1 or 2 years (sometimes 3!) before rising again.
Corcoran produces 10 year neighborhood specific price trend reports. Here’s an example of a report for condos in Murray Hill – Murray Hill 10 Year Condo Report. If you’d like a report on a specific neighborhood, just ask and I’ll share it!
Bloomberg also has an excellent price tracker which lets you compare year over year price changes in neighborhoods throughout the city – Bloomberg NYC Property Prices
And of course, there’s the existing inventory itself.
Start looking online.
How do the places make you feel? Do they make you feel excited to see more? Or deflated about what’s actually out there? And most importantly – can you see yourself in any of them long term?
If you can, then that’s a good sign that buying might be right for you!
If you think that buying may be the right move for you but you’re not sure where to start, then go download my free First Time Buyer’s Guide for a step by step, in depth overview of the process.