I’m the first to admit that not only am I not well-versed in housing economics, I can honestly only hear/read so much on the subject before I space out and start singing “Spanish Flea” in my brain.
Fortunately, this article on the realities of home ownership both lays out an apples-to-apples comparison of renting or buying and deconstructs some of the myths of renting (renting is throwing away your money, owning your own home is a forced savings plan, etc.) far better than I ever could.
So, what does this all have to do with frugal life in NYC? Well, I spent some time using the interactive widget on NYTimes.com mentioned in that article.
Right off the bat, buying in NYC — even something in my unfashionable neighborhood — definitely won’t be cheaper. So, let’s say I theoretically move out of NYC, but remain in the northeastern US (current median home price $244,300). Initially, it appears as though after 6 years, I’d have more money if I owned a home rather than if I rented… but I don’t own a car.
If I consider the additional cost of one car (using the national car-cost averages I cited last time) as a utility I would now have to pay (while also factoring in the heat, hot water, and municipal water bill that are part of my rent now), buying becomes better than renting after 26 years.
And that’s assuming I just have one car. Lower housing prices, particularly in the north-east, often mean longer commutes, which would possibly make two cars a necessary evil.
I could go on like this for a while, inventing various scenarios and coming up with plausible figures to plug into the calculator, but I think you get the general idea:although many NYC rents often appear to be exorbitant, factoring in transportation costs can often mean that you’re paying nearly as much as you would for a suburban mortgage + car(s).
There’s still one last factor I didn’t cover here, because it’s something that can’t really be quantified — the simplicity of renting.
Here’s the best example of what I mean: I have a subscription to Consumer Reports and with nearly every month’s issue, I read comparisons of products that, as a renter, I will never have to research, purchase, repair or replace. Stovetops, water heaters, kitchen counters, leaf blowers, gas grills, refrigerators, roofing, desk sealants… a seemingly endless list of stuff.
It makes me wonder, how many hours would I spend just thinking about those things? How much of my life would be taken up by wanting/buying/fixing/shopping for all that stuff? Suppose I could remodel my kitchen — would food taste better if it was prepped on a slate countertop? Would a $4,000 Viking range really make me a better cook?
Renting where I live forces me to step off that treadmill of keeping up with the Joneses — even keeping up with the frugal Joneses across town who do all their own appliance repairs and home remodeling.