Buying vs. renting: what makes sense for us?

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amother

Sun, Nov 06 2022, 1:14 pm

My husband and I find ourselves at a crossroads as we just had our first baby and are outgrowing our 1-bedroom in NYC which we love. We're not sure if our next move should be buying or renting.

Current rent: $2400 - very cheap for our area
Prospective rent: ~$3800 - we've looked extensively and this is about the lowest it'd cost to get an appropriately sized new apartment here

We're starting to consider buying instead of throwing money down the drain every month. We have about $200k saved up for a down payment and are looking at apartments in the $600k range, which would end up being about $4200 in monthly mortgage/maintenance payments. Our income is $200k combined. Unfortunately we're also about to start paying $2500/month for daycare (again, cheapest in the area) so it would be doable but tight. We'd be going from "having lots to put into savings every month" to "ok, we need to really be careful about spending."

Interest rates are high, and no one can predict if/when they'll go down. The flip side is prices are cooling a bit due to the high interest rates. Another factor - we're not sure if we want to stay in the city more than 5 years or so. We may want to move to the suburbs after that. Not totally set either way.

I'm not going to make any decisions based on imamother alone, of course, but we're among the first of our friends to look into buying, so I'm not sure who else to turn to for recent/relevant advice. Based on this information, any thoughts about our situation? Or buying vs renting in general, or buying in the economic landscape right now? Kind of trying to just crowdsource information and ideas. Let me know if there's more questions I can answer to paint a fuller picture. Thank you!

amother

Mocha

Sun, Nov 06 2022, 1:20 pm

If you can buy then buy
It’s an asset
Generally best to put your monthly payment toward a mortgage
Especially with current and projected hyperinflation and recession conditions
Ask your accountant

amother

Daffodil

Sun, Nov 06 2022, 1:24 pm

Do you know where you would want to live in 5 yrs.

amother

Mocha

Sun, Nov 06 2022, 1:29 pm

Especially now your asset typically will appreciate while your money typically won’t
/not accounting advice

srbmom

Sun, Nov 06 2022, 1:31 pm

Can you wing it in your 1 bedroom for another year by being creative? Either putting up a partition in your room, putting baby in a closet, utilizing part of the living room... When we lived in Kew Garden Hills 15 years ago it was the norm to live in a 1 bedroom apt with one and even two kids because the rent was so high.
Over one year you can be saving close to 20k

amother

Yellow

Sun, Nov 06 2022, 1:32 pm

Buy

amother

Sun, Nov 06 2022, 1:37 pm

srbmom wrote:

That's actually exactly what I'm thinking... if we can stretch one more year here, it'd be a huge savings. I pitched this months ago and my husband protested, but I think now that he's seeing how much more we'd be paying to rent a 2-bed, he's coming around to the idea. My tentative plan is to resign our lease and make it work here until/unless something perfect comes up on the housing market. $600k doesn't even really get us far - we're mostly looking at large 1 bedrooms where we'd have to put up a flex wall to carve out a small kids bedroom in the living room, so it's not like we're drowning in fabulous buying options either.

Thanks for all the input so far!

Not_in_my_town

Sun, Nov 06 2022, 2:03 pm

Would you consider moving out of town? There a places where you could buy a full house for the downpayment you have...

amother

Sun, Nov 06 2022, 4:20 pm

Not_in_my_town wrote:

Would you consider moving out of town? There a places where you could buy a full house for the downpayment you have...

We've definitely considered it, especially as people in our community are starting to have kids and move OOT (one couple we're friends with just got a huge house in Ohio for the same monthly cost as our tiny apartment, very tempting!!) but for now we love it here.

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