Rent vs. Buy in 2018:
A Debate Reignited
With rental prices the lowest they've been in a while and with landlords and developers offering huge discounts and incentives, why even buy at all? It’s a fact that you can now get a nice rental in a new building for hundreds, or even thousands, less than what a mortgage + monthlies + taxes would be for a comparable co-op or condo. So why not stockpile your money and wait for sale prices to fall? We are hearing this more and more from buyers, so let’s address it.
Currently, Manhattan rents are stagnant. But, as we all know, they will go up. Landlords might give you a break this year, but as soon as they have the chance to raise your rent to the new "market" rate, they will. And if you don’t agree to the drastically higher new rate, they'll easily get a new tenant who will, and all that cash you thought you'd saved will be flushed down the toilet on moving expenses, broker fees plus a higher rent in a lower quality apartment (not to mention if interest rates go up, as they are slated to, that monthly mortgage payment will go up significantly).
Today’s lower rents won’t be low for long, so if you plan to stay in your home for five years or more, purchasing always beats renting. You might pay more in mortgage + monthlies + taxes now, but rents will meet those monthly expenses over time. Plus, your monthly purchase nut can be greatly reduced through tax savings. Even under the new tax code, that includes deductions on interest for up to $750,000 of your mortgage and deductions of property taxes up to $10,000 per year. Sure, there might be headaches that come with property ownership, but the equity you’ll earn over five years or more will be your real windfall.
So, unless you're planning to move in two years' time — say, for example, if you're only the in city trying it out for a couple of years — then yes, take advantage of developer's discounts and lower rents today. But, if you're here for the long haul, don’t think short term! Leverage your money while it's still cheap. Interest rates are on the rise, so start building equity now — you’ll be happy in five years that you did. (Maybe even less than five years in Manhattan, where our market often sees returns faster than the national average).
Bottomline, I’ve never heard a homeowner regret their purchase if they think long term, but I've heard from plenty of potential buyers who regret not jumping into the market "back then."
- Compass expands into Westchester! Read full article
- Compass has already concurred Washington D.C. now its time to grow into Virginia, stay tuned for more information.
- Our goal is for Compass to be everywhere, and by the end of 2018, we will be operating in every major metro area in the United States, bringing us to 100 offices nationwide! #CompassEverywhere