REAL ESTATE BLOG SAPO

New York City rents are higher and apartments are smaller and bleaker, a New York Times real estate article complains.

People seeking NYC housing have to “settle in neighborhoods they would have shunned a few years back.  They watch their savings accounts shrivel as they cut into them to meet monthly rents…..creating a bleak vision of tomorrow,” the writer continues.

Sound familiar?  It should. It was written almost 32 years ago, and quotes one women who was so galled by the $345 monthly rent for a Manhattan studio apartment that she bought a $40,000 coop in Brooklyn instead.  

Today, that Boerum Hill loft is worth more than 100 times its original value.

Buying New York real estate made sense then, and it makes even more sense now. In fact, I believe it’s the only meaningful investment in this non-recovery economy.

Cash, stocks, retirement accounts, money markets, and CDs are all stumbling or losing value. Interest rate returns on most investments are rock-bottom low.  And precious metals like gold and silver are cripplingly expensive. Never mind the fact that precious metals are entirely different than housing. You can’t live in gold bars and silver coins, but even if the dollar crashes, a coop, condo or house will still stand. Housing is real, tangible and, as distinct from gold and silver, everyday practical.

So the conclusion now is the same as it was in 1980. It’s still wiser to buy property rather than rent it. Use your money to build equity and pay down principal, particularly in such a consistently ‘hot’ market as New York City. Take advantage of what may turn out to be a ‘perfect storm’; a combination of low mortgage interest rates (under 4 per cent, in some instances), abundant NYC property, and a willingness – in most cases – to negotiate price.

There’s only so much further prices can dip, only so many more housing options. Since everyone has to live somewhere, you may as use those monthly payments to build equity, pay down interest, and otherwise benefit you, not a landlord.

To the author who wrote, in the Times piece of Jan. 22, 1980, “there are no rules of thumb anymore,” I offer this counter-argument; property is forever. Over time, it appreciates – and rents rise, sometimes faster and higher when there are too few buying options available.

Remember that overpriced $345 studio from three decades ago? It’s going for about $2,500 a month today.