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The debate between renting or buying is constant. Billy Crimmins, Marketing Strategist for Tom Crimmins Realty, and Noura Jost, an intern for Bold TV, believe the answer to the ongoing debate is to decide based on how long you plan to stay in one place. Millennial housing needs are unique because many millennials have sufficient funds to buy a home, but they let fear and commitment issues hold them back.
The Debate
About one-third of Americans rent apartments, but that is not because they can not afford to buy. We millennials are known for our indecisiveness, and with that comes the fear of buying a property. To combat this concern, a survey was conducted to find which areas of New York pay off first. Streeteasy found that properties in Inwood, NY, with a median sales price of $453,000, pay off in only one-and-a-half years. More expensive areas such as the Upper West Side have a median sales price of $1,175,000 and could be paid off in 5.7 years. So buying and paying off a home is doable if you are making the necessary income. Not all homes will require you to pay off loans for the rest of your life.
However, buying property in New York City is a unique situation since properties are valued so high, while property prices continue to drop in other U.S. cities. Crimmins believes that properties in Detroit are good investments. Forbes has listed Detroit as one of the most undervalued housing markets in 2017. Housing prices in Detroit are at a record low, so if you are looking to invest in a property, now is the time to buy.
The magic number
The magic number seems to be seven years. If you plan on living in a new area for less than seven years, renting is the best option.
“Within the first seven years, the bank wants their money back quicker, so you are mostly paying interest and not principle in the first seven years,” Crimmins said.
Often, new renters do not realize that they are paying front-loaded interest for those years.
Crimmins also gave some helpful tips for new renters, the most important being get to know your landlord. Making sure you check out the water, utilities, and the building before signing a lease can save a lot of hassle when appliances start to fail. Renting for short-term living in the city is smart and allows for more freedom to move quickly.
Takeaway
Buy or renting in New York City is a unique situation due to the higher property costs and taxes. However, by following the rule of seven years, the consequences can be lessened.
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