Posted by Leonard Steinberg on April 24th, 2013
This is an actual story from a commentator on line that I thought was worth re-printing as it is a story I hear so many times from those at retirement age:
“One way or another, try to buy a place, especially if you expect to stay a long time (at least 5-10 years). My wife and I stretched and got our co-op apartment–a 2-bedroom, 1 bath on the upper west side–in 1989 for about $2000 (mortgage and maintenance combined). 22 years later, we’re still there. Now costs are closer to $2500 (we get to deduct about $700 a month) and the value has gone up over 4 times.
It was hard to do, and I admit that had we found a decent/cheap apartment, we probably would have gone that route, but we kept coming up empty, and at least there were a lot of apartments for sale to look at. In contrast, we know several couples who got great deals like $1500 a month for a rental, but they never moved and now have no equity; and their apartments feel pretty outdated.
That aside, one big advantage to living in New York is that you don’t need a car. I lived in Los Angeles for two years and loved how much cheaper everything (food, rent, going out) was, but car expenses more than made up for that, so in the end I was just as broke.”
The big picture message is that renting is at times cheaper than owning for sure, that buying does take pain (especially now, but it has always been a bit painful in the beginning), but by owning you are building equity over time, taking that tax deduction, capitalizing on low interest rates that come along very rarely, and holding on for a long time pays dividends. And yes, the cost of buying in New York is prohibitive, but add in the cultural amenities and conveniences such as not needing a car, and comparatively the costs are not too far off other large US cities…..and certainly cheaper still than other major world centers. I have met so many older New Yorkers who told me how they sacrificed so much to buy their home, and now by selling it have the bulk of their retirement under the roof that housed them over the years.