The current real estate market plays a heavy role in whether or not you rent or buy a house in Manhattan. The market can affect the prices of homes, rent, and land in general. Every person has a unique situation and requires different types of real estate to fit the needs of their lifestyle and family.
Right now, the real estate market in Manhattan is a buyer’s market. Home values are lowering and sellers are less inclined to try and list their houses on the market because they’ll get less than what they want. The median home value in Manhattan is $1,228,200. Manhattan home values have declined 6.1% over the past year and Zillow predicts they will fall 4.1% within the next year.
The median price of homes currently listed in Manhattan is $1,550,000, while the median price of homes that sold is $1,044,500. The median rent price in Manhattan is $3,395, which is higher than the New York median of $2,817.
As you can see, houses are incredibly expensive right now and would make for an expensive purchase. However, you should still do your research and see what option best suits you.
Renting tends to be a favorable option for people who don’t want to make a commitment to a house, and maybe aren’t in the right financial standing to purchase one. This is understandable because buying a house comes with many upfront costs such as a down payment, closing costs, transfer taxes, property taxes, and real estate commission fees. After you get past the initial costs, going forward you are in charge of paying for your own repairs and upgrades.
Right now, the average rent price in Manhattan sits around $3,395 a month. This is more than $2,000 above the national average and can become costly if you decide to rent for long periods of time. However, for residents that are only going to be in Manhattan for a few years, they might not be inclined to front the costs of buying a house or may not be able to afford to.
Advantages of Renting
With renting, you can enjoy the benefits of a house, condo, apartment, or really any type of land that you choose to rent, without paying a fortune at the beginning. Typically, the only upfront costs are a security deposit and first month’s rent (and sometimes last month’s rent). You aren’t in charge of repairs unless you create the damage yourself, and if something needs to be fixed, you either call the owner or property management company.
Disadvantages of Renting
Renting tends to not be a favorable choice for people that want their monthly payments to be going towards an investment. For example, if you pay $4,000 a month for an apartment in Manhattan, you’re spending $48,000 in one year and left with no investment. To put it in perspective, at that rate, you could have a $200,000 house paid off in 4 years.
When you rent, you also have to succumb to the pre-existing conditions of the house, townhouse, or apartment you’re renting. Now, we all know there are renters’ laws that protect the wellbeing of tenants, but your landlord is not legally required to fix the cabinets if one of the handles are broken or the paint is chipping on the walls.
You also have to call your property management company to request any repairs or damages. This can sometimes lead to delays in getting things fixed. For some people, they like to have some control over the condition of the house they’re living in.
Overall, renting is great if you plan on living somewhere temporarily and don't want the responsibility of buying and owning a house.
As we discussed previously, the average sale price of a house in Manhattan right now is high, and that’s with sellers listing in a buyers market and not inflating the prices of their homes. You can expect to pay as much as $1,690,000 if you want to live in the Flatiron District. However, if you are a small family or even live alone, you can get a one-bedroom condo for as low as $400,000. A possible benefit to these prices is you could live near Central Park or have decent views of the city.
Advantages of Buying
The benefits of buying are that you have full control over what you do to your condo or house. For people that enjoy interior designing and “do it yourself” projects, this gives you the freedom to do so. You also get to make repairs and upgrades on your own time and aren’t at the mercy of the property management and landlord schedules.
Buying a condo in Manhattan can also be an investment if you decide to make minor upgrades to make the property value for favorable to buyers. You can rest easy knowing your monthly payments are going to the overall cost of your home loan, and not in the hands of someone else.
Disadvantages of Buying
Unfortunately, it can’t all be positive, because the real estate market in Manhattan doesn’t show a rise in home values. This leaves you with potentially owing more on your mortgage than your home is worth. If you plan on selling before your mortgage is paid off, this is definitely a factor you need to consider before buying in Manhattan. If you are planning to live in this property for an extended amount of time and have plans to pay off your mortgage before moving, then you shouldn’t have a problem with this.
Overall, buying a house is not entirely a bad option, even with the current Manhattan market conditions. In fact, depending on how much you put down up front, you might even be left with lower monthly payments, thus making it a more affordable option long-term.
Whether you decide to go down the path of buying or renting, it's important to do your research on the current market conditions and take a look at your financial standing. Buying a house can be a tricky process if you have never bought before, so it’s important to connect with an experienced, local real estate agent for guidance and support throughout the process.