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  • Writer's pictureGalia Gichon

Home Owner's Dilemma

With all the news about 25% of the country’s homeowners being underwater, there are still 75% of homeowners that are building equity in their home.  As I work with many New Yorkers; paying rent, saving for a down payment or carrying a mortgage is usually top of financial topics. It’s like that friend you know you should hang out with, she’s fun but not a great influence.  Can’t live with her, can’t live without her.  An issue I’ve seen recently is being tied to a rent controlled apartment.  Because the rent is so low, my clients are able to save quite a bit of money.  They do want to buy an apartment but don't have quite enough for the down payment because apartment values are still so high.  Plus, their rent is so low that it doesn't make much sense to trade that low monthly rent for a higher monthly mortgage.  Even with the tax deduction they will get, their new mortgage payment is still higher.  However, on a long-term basis, I still believe they should trade that low rent payment for a mortgage because they are building equity.  The net worth of homeowners is 41 times greater than those that rent (National Association of Realtors).

There are also those folks that are paying high rent and are not able to save for a down payment.  They would see the value of moving if they could save the money.  A bit of a catch 22 situation.

So what’s a wanna-be home owner to do? One suggestion is to look for an apartment in not the trendiest neighborhood where you can still get an affordable studio or one-bedroom (Upper East Side on York Ave, high 90’s on the West Side, Harlem, near Penn Station).   Outside New York City, real estate is still a great value.   In 72% of the 50 largest US cities, it is still more affordable to buy a 2-bedroom home than rent (

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