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Buying vs. Renting

March 10, 2010 3:24:48 PM PST
The housing market has been a roller coaster ride since the crash two years ago. Last month, the National Association of Realtors says the sale of pre-owned homes fell 7 percent across the country.That's well below economists' expectations, and it has created concern that the housing market recovery may have begun to stall. But still, we haven't seen a buyer's market like this in a long time.

Home prices in the New York metro area are down 6 percent in a year. So, a lot folks are looking at homes.

Many are debating whether to jump into the market now, or will prices drop even more?

It's also become a good market for renters. For sellers and landlords, not so much. So the big question: to buy or rent?

After years of renting, Jennifer DiFiglia and her husband Todd Toler are taking the plunge, closing on a two-bedroom condo in a landmark building in Fort Greene.

"It's a buyer's market in Brooklyn right now," Toler said.

The new economy is producing winners every day, and Jennifer and Todd are among them. They were priced out of the old real estate market, only to find their dream home in 2010.

"it used to be where it was almost insulting to offer anything below the asking" Toler said. "Now, we're quite comfortable coming in $50, $60, $70,000 below asking as a starting place for the negotiation."

Real estate experts say some of the city's best bargains are in Brooklyn, whether you're renting or buying. But what you choose to do should depend on your time frame.

"If you're talking about 3 or 5 years, then the math almost always works out that it's better to rent," Michael Smith said.

Smith created StreetEasy.com, an interactive site for New York City real estate.

He would ask the following questions of potential buyers:

  • Are you sure you will qualify for a mortgage?
  • Have you calculated maintanance and taxes?
  • Do you really have the downpayment?
  • Can your downpayment earn more in interest if invested elsewhere?

    A rule of thumb, Smith says, is to take your rent and multiply it by 200. That's about what the apartment should sell for. If your number is a lot higher, then it makes sense to rent.

    After years of crunching the numbers, Jennifer and Todd decided that buying was almost as affordable as renting.

    "We look back over our years of renting, and we've been living in the neighborhood we want to live," Toler said. "And life is short."

    There are so many variables and, in the end, the decision to buy or rent is often an emotional choice. But it's one you should make not only with your heart, but your head.


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