Can we commit to life as NYC renters for the foreseeable future?
October 24, 2019 7:31 AM   Subscribe

We live in NYC, more or less happily. I'm also pretty sure we won't be able to buy an apartment here. Is it crazy to live life as renters for the foreseeable future?

My husband and I have lived in NYC for 12+ years. I've had a love-hate relationship with the city (it's so fun! it's so expensive! the subways rule! the subways are garbage!) but at this point I feel pretty good about sticking around for the following reasons:

-neither my husband nor I ever EVER want to own a car
-we have a strong support system of good friends
-we like raising our children in a diverse city that reflects our values
-we're definitely not rich by any means but we don't need a lot of space, don't long for a backyard or two-car garage, and we are able to support a modest lifestyle without feeling terribly stressed about finances.
-both my husband and I run small businesses that COULD theoretically work elsewhere, but it would require a lot of upheaval to relocate. I recently opened up my own psychotherapy practice which is doing quite well already, and I really love being at the epicenter of my profession where there is little stigma around therapy and lot of professional support and room for growth.
-we love our families, but they don't live anywhere near places we'd consider good fits for us.
-every time we travel to smaller cities where houses are much more affordable, we intellectually understand their appeal but nothing really speaks to us. These places feel sort of limiting and no other city has enough friends or professional connections to make a relocation feel worthwhile.

The one big red flag about staying in NYC is that I'm not sure buying property here is a really an option for us. Currently we live in a cute but slow-paced Brooklyn neighborhood that's known for being family-friendly but is still a subway ride away from most other interesting stuff happening in the city. It can feel isolating and a little depressing to us after years of living in more vibrant neighborhoods. We moved here to try out a slower pace of living, which coincided with having our first child, and we've found after 5 years it's not a great fit. Plus, my husband and I are both doing well financially thanks to recent professional successes and finally have the savings needed to pay off what's left of student loans and improve our quality of life. Theoretically we could be saving money to buy a modest 2-bedroom in a sleepy neighborhood in far-off Brooklyn or Queens in a few years. But we both feel like living far from the action defeats the purpose of living in NYC, plus an even longer commute than the one we have now is a huge downside. We want to be close to the interesting stuff, especially because schlepping kids on long train rides is its own private hell so we often wind up staying home anyways. But obviously a closer neighborhood means higher rents, which also means less in savings for ever buying a place. Apartments in neighborhoods we love are just astronomically expensive, starting out at 1-2 million. I honestly do not know that any amount of saving will make that sort of down payment achievable, especially when we'd be competing with buyers who can front a lot of cash for the most desirable properties.

Maybe the NYC real estate bubble will burst, though in my experience the market here seems more immune to drops than elsewhere. For now, we're contemplating making the leap from this sleepy, relatively cheap neighborhood to one that's closer to the city, shorter commute, more exciting and kid-friendly, but more expensive. Is this crazy? I'm torn between wanting to be fiscally responsible and wanting to enjoy our lives in the city more fully. I do feel like NYC is a different real estate beast than much of America, including comparably large cities like LA and Chicago, so I'm skeptical of the advice that buying property is always a better choice than renting, especially when the only property we may ever be able to land feels like a huge lifestyle compromise.
posted by zoomorphic to Home & Garden (17 answers total) 7 users marked this as a favorite
I am a firm believer that having a place to live has an inherent value on its own. I get annoyed with the idea that renting is "throwing money away" -- no, I'm exchanging that money to live in a place I like. That's more important to me than owning a place just to own one.

You aren't interested in buying now. You may be in the future. You may want to leave NYC. You may not. There's nothing wrong with renting for as long as you want to.
posted by darksong at 7:42 AM on October 24, 2019 [19 favorites]

My comment wont' be about NYC in particular, but about money stuff in more general terms:

I'm skeptical of the advice that buying property is always a better choice than renting,

I think this is a sensible thing to be skeptical of. Setting aside the flow of services from having a roof over your head, there's tradeoffs to each (that you're surely aware of); the degree to which you control your own space (and the destiny of the building you live in), whether you're responsible for maintenance, the cost of insurance, etc.

If the argument you're thinking of is "the house is an asset and rent is sending money into the void:" to the extent that you're spending less money on rent than you would on the house, then you can save the difference. Sure, housing prices appreciate over time, but you have to pay a lot of money up front so in a net present value of cash flows sense it's not totally obvious that buying a house is always better.
posted by dismas at 7:46 AM on October 24, 2019 [4 favorites]

I'm torn between wanting to be fiscally responsible and wanting to enjoy our lives in the city more fully.

It’s just as fiscally responsible to plan your spending and savings around wanting to stay in New York and rent for the foreseeable future, taking into account likely changes in rent, when you’d want to retire, other costs in your life, etc, as it would be to save for a down payment. Both are ways to make sure you can afford to live your life the way you want to.
posted by sallybrown at 7:47 AM on October 24, 2019 [2 favorites]

Speaking as a long-term renter - really, there's nothing that really says you have to buy. I live in a building with three families that all are renters and all have children, and two of them have been long-term renters as well. The third just moved in less than a year ago, so there's definitely a pattern of families-who-rent.

That said, the notion of saving something isn't a bad idea. Instead of saving specifically for a downpayment, maybe save for...."a downpayment on a house or emergency savings or whatever else we feel like". You know? It'll be there if in a few years you decide you want to go in on buying, but if you never decide you want to buy, it'll still be there for if one of you breaks their pelvis and has to take leave off work for a while or something.

(Incidentally, speaking of long-term renting - I'm still in the same apartment I was in when I met you AND your husband, in the days before you even met each other - so if there's a problem with long-term renting, I'm really screwed. :-> )
posted by EmpressCallipygos at 7:48 AM on October 24, 2019 [3 favorites]

I live in an obscene real estate market (metro Boston, we’re really and truly not terribly different from NYC and SF due to the biotech scene here). I have finally accepted that I will probably rent until I leave the city.

I mean, I have a slightly below-market rent at this point, and it’s around 25% of my take-home salary. I *finally* feel like I can breathe, and save a big chunk of cash each month. If I bought the cheapest thing I could find within my neighborhood, I’d be tripling (at least) my monthly housing costs, plus maintenance costs, and that’s after I spend years saving up a down payment and fighting it out against cash-flush folks who can make a full-price all-cash no-contingency offer. It actually *doesn’t* make financial sense to do that - to sign a 30 year mortgage I can barely afford at age 45 and won’t be able to pay off before I (hopefully?) retire around 70.

Don’t beat yourself up about this! Live where you’ll be happy, and save what you can for other purposes that will equally ensure you have stability in your later years. Long-term renting is great, being responsible for a furnace or a roof isn’t the apex of responsibility!
posted by amelioration at 8:00 AM on October 24, 2019 [4 favorites]

You seem to have thought this through and have this anonymous internet commenter's permission to rent. Just one question: What is your long-term plan for saving and retirement? Buying a house is a form of automatic savings: In return for your mortgage payments, you get a place to live both while you're paying it off and afterwards. E.g., buy a place at 35, pay it off by 65, and in retirement your housing costs are very low, or you can sell and use the money to pay rent somewhere else. If you're renting, you will need to save more money in other forms because you will have to continue to pay rent after you retire.
posted by Mr.Know-it-some at 8:34 AM on October 24, 2019 [17 favorites]

Being a lifelong renter is neither unusual nor remarkable in New York. Something like 60% of New Yorkers rent. Live where you want and put money into a retirement account. You’ll still be doing better than lots of New Yorkers.
posted by Automocar at 9:00 AM on October 24, 2019 [13 favorites]

My mother still lives in the rental apartment in NYC she moved into in 1976 and brought me and my sister up in. I think everyone's right that you need a slightly more conscious saving/retirement plan than a homeowner might, because you're not automatically accumulating a big asset, but it's a perfectly sane, reasonable way to live.
posted by LizardBreath at 9:03 AM on October 24, 2019 [2 favorites]

Echoing Mr. Know-it-some, as in that's why we didn't stay in New York. We didn't believe we could live the way we wanted to and take care of our own futures, given our particular careers, while we lived in New York. And I grew up there, in apartments; I love it! I would love to go back later and would expect, then, to rent. But we decided not to make the lifestyle sacrifices necessary to raise a family in NYC while also saving sufficiently for our own futures. It's less about owning/renting, which is probably a wash, and more about a larger strategy -- and also very dependent on our specific priorities. I think it was the right decision given our priorities but it was also a big sacrifice, in some ways, to leave.
posted by chesty_a_arthur at 9:08 AM on October 24, 2019

Assuming that it works the same way in the US as it does in the U.K., one difference between owning with a mortgage and renting, is that after a certain amount of time, your mortgage is paid off and you have no fixed outgoing of that type any more, usually coinciding with retirement age (although you’re obviously still on the hook for property taxes, insurance, repairs etc). Rent on the other hand never stops. So you’d want to think about building a cushion of savings to enable you to pay your rent even if you’re no longer earning after retirement.

So really, echoing what others are saying about planning retirement and savings planning.
posted by JJZByBffqU at 9:26 AM on October 24, 2019

It is nice to hear from you that you and OC are doing so well! (If he has been back under a different name, he has been successfully stealthy from my perspective)

Being 'fiscally responsible' doesn't mean spending as little as possible; it means being confident that your spending aligns with your priorities. It's completely reasonable to have any of those priorities, but if I were you I would want to understand the financial bargain that I was making as precisely as I could with any of them.

You don't mention how serious your family has been about budgeting, but if you have been anything less than 'pretty serious', now is a good time to quantify as precisely as you can the financial costs and benefits of 1) moving away from NYC 2) staying where you are and saving for something you can afford in the metro or 3) moving to a more expensive neighborhood in the metro.

YNAB has been game-changing for us from this perspective but there are other ways to do it. Good luck! Tell Mr. Chyme that Kwine says hello.
posted by Kwine at 10:12 AM on October 24, 2019 [3 favorites]

God. I hate where I’m living. I’m a big city girl and nothing less will do, however, my kids have issues that mean the place I hate is perfect for them. (And my husband’s home city- which he loves) I’m going to be able to stomach this on the caveat that we buy a little apartment for me in the BIG CITY- this will be rented out while the kids are young but in my dreams my kids are grown and I get to escape to this apartment.

So what I wanted to suggest was perhaps buy something super tiny in NYC that you can rent out and then retire in? So the city can’t price you out in your jazzy older years?
posted by catspajammies at 10:23 AM on October 24, 2019 [1 favorite]

Our other thought in buying a tiny place in BIG CITY is that if our kids want to go live and do university in big city that they can use the tiny apartment, or that the rent on tiny apartment would subsidize whatever other pricy pursuit they want to do in their 20’s or to start out entry level at a job in BIG CITY... whereas if we don't have the apartment we’d need to be paying for their accommodation or they’d have to be doing a commute.
posted by catspajammies at 10:27 AM on October 24, 2019

You can also keep an eye out, long-term, for various price-limited purchase (e.g. HDFC) and/or rental options. There are a lot of rent-stablized/affordable-by-lottery units out there if you are patient and persistent enough, able to maybe pay double rent for a few months, etc. It's a decent middle road between renting at market rate forever and buying.
posted by internet fraud detective squad, station number 9 at 11:15 AM on October 24, 2019

Don't forget to sign up for the affordable housing lotteries!
posted by dame at 11:19 AM on October 24, 2019 [1 favorite]

As you’ve figured out, buying in NYC (the insane initial investment plus all of the pricey maintenance) is for the very, very wealthy. Renting where you really want to live is simply a better value for many people. Nothing wrong with it at all. Life is short and your kids’ childhoods are even shorter. I say splurge on the nice rental in the great neighborhood, and live your best lives.
posted by curtains at 2:38 PM on October 24, 2019

Sign up for the housing lotteries if you qualify (and Mitchell-Lamas, and Penn South!). It can be startlingly easy to get selected if you're in the 165% AMI bracket, because the rents aren't actually that much of a bargain at that level (they're still usually well below market, but they're not cheap)--you're essentially buying your way into rent stabilization. (In my opinion, the thing that could really disrupt your plans in the medium term is a series of harsh rent increases wherever you're living.)

People like to talk about homes as retirement assets but: (1) property taxes will continue, and only go one way; (2) upkeep costs continue, see (1); (3) houses are not particularly liquid assets (you can't sell off a window to pay for a hip replacement). The number of seniors who struggle to stay in their paid-off houses is shockingly high. We've had one bubble that has really distorted people's views. On average, housing returns are not great at all. But you do need to save in a way that reflects your future goals.

Right now I do not see myself finding a home within my narrow price range that I would love enough to vaporize $25K in closing costs over, so I guess I'm going to rent til I die. That means my savings is all in the market, and I need to be thoughtful about that.
posted by praemunire at 4:45 PM on October 24, 2019 [3 favorites]

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