Whether to rent or buy one's home is a big financial decision. For residents of New York City, where residential property prices are among the highest in the country, the stakes are even greater. Whether renting or buying makes more sense will depend on the individual circumstances of each person, including their financial situation, their career plans and their preferences in terms of where they want to live.
There are a number of factors to consider on the financial side. The price of the home is obviously a major consideration, but it's not the only one. The mortgage interest rate, the down payment and the actual value of the home interest rate tax deduction should all be considered when deciding whether to buy. How long the individual plans to stay is a big factor; the longer one plans to stay in one place the more attractive buying becomes, because many of the upfront fees and costs are spread over many years. The potential resale value of the home is a major consideration in buying, but very difficult to predict.
For buyers of residential real estate, some fees will have to be paid at the real estate closing when they buy their home, and some will have to be paid when they sell it. For renters, the major upfront costs are the security deposit - which is refundable if the property is returned to the landlord in good condition - and any broker's fees.
Buyers are responsible for costs of maintenance and repair that most renters do not pay directly. These costs can be surprisingly large, and sometimes come at unexpected times. Homeowners are also responsible for paying all utility charges; for renters, whether these are included in monthly rent will depend on the lease. For those who buy a condominium, association fees will also have to be taken into account.
When one makes the decision to buy or rent a home, having solid legal advice can be extremely beneficial. An experienced real estate lawyer can review the proposed purchase agreement, lease or other real estate agreements, identify potential title issues for buyers, and help the prospective buyer or renter decide whether the deal is right for them.
Source: New York Times, "The Upshot: Is It Better to Rent or Buy?" Mike Bostock, Shan Carter And Archie Tse, April 14, 2014