To rent or to own in New York City: How housing counseling can help you decide

Like getting married or having children, home ownership is revered as a signifier of having “made it,” and of being completely financially independent. Ownership can come with a price, however. Just as more and more couples seek pre-marriage counseling to solve problems that would otherwise come up later in the marriage, more and more would-be homeowners today can choose to turn to housing counseling to assess their readiness to own. Advantage CCS offers housing counseling to people just like you, in the form of group sessions and private, one-on-one sessions with a housing counselor.

If you've recently felt an urge to buy, it might be because you are conscious of the money you're spending on rent each month. In New York, including Manhattan, Brooklyn, Queens, and even the outlying areas like Nassau County, rents typically begin at $1000, even for a studio apartment. The nicer your neighborhood, and the greater the apartment's square footage, the higher your rent will be. These New York numbers make home ownership seem tempting. Add to that thought the prospect of your landlord hiking rent every year, and the noise coming from your neighbors' wood-floored abodes above and below, and you might be rushing to enroll in sessions with a housing counselor.

Housing counseling in New York: From Brooklyn to Bleeker St., learn what you can afford

According to a Sept. 2005 New York Times article, a two-bedroom apartment in the Upper East Side neighborhood of Manhattan costs nearly 4K each month to rent – but buying that apartment would cost you over $1 million dollars. New York rents and home prices have not increased dramatically since then, but in certain pockets of NY, such as Harlem or Williamsburg, Brooklyn, so-called “gentrification” is turning some once-cheaper New York real estate into bank busters.

The other harsh reality of New York is that it's expensive all around. Should you lose your job, amass insurmountable credit card debt, or teeter on the verge of bankruptcy, you might need to sell your Brooklyn co-op or Manhattan condo. Fidelity Investments cautions against home ownership if you're not planning to stay in one spot for, at minimum, three to five years. Ownership of expensive real estate for less than three years is a money-losing proposition. If you do enroll in housing counseling, we advise you to make sure you discuss your long-term plans and goals with your housing counselor. This is an important step to determining whether ownership is right for you, and it is all-too-often overlooked.

Attending housing counseling classes or enrolling in private sessions with a housing counselor will help you to determine whether renting or owning in New York is the best choice for you. You will be able to examine your financial situation, including your debt-to-income ratio, your gross salary each month, and how much of a down payment you can afford to make. You will be able to develop a budget that can set you on the right path to home ownership.

CityRealty.com cautions that in New York especially, would-be homeowners must make large initial down payments on an apartment, condo, or co-op that they wish to purchase. With the prices of these homes skyrocketing into the millions, a 10 percent down payment can begin at $100,000 to $200,000, and can often exceed those amounts. You housing counselor will help you to take an objective look at the reality of your financial situation, your debts and assets, and your general financial stability on a month-to-month and year-to-year basis.

If, after attending housing counseling sessions, you conclude that New York housing ownership does not fit into your financial strategy or debt management plan, don't fret. Continue to pay down your credit card and other debts, and analyze your lifestyle to find ways that you can increase your income while lowering your debts. There is no rush to own housing, especially if you are a younger adult and have not yet defined a solid life path. Many people who want to eventually own housing in New York City achieve their dreams by living frugally prior to buying. Frugality might include moving out of Manhattan, Brooklyn, or Queens, NY to a cheaper outlying suburb. It might mean changing your line of work. It might mean forgoing graduate school. Together with your housing counselor, you can determine whether renting or owning in New York City is the best choice for you right now.