Author Topic: Trade for lower-priced NYC coop or don't bother?  (Read 960 times)

freya

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Trade for lower-priced NYC coop or don't bother?
« on: September 02, 2014, 11:59:19 AM »
Please help me figure out whether this would be a Truly Mustachian Move?  I've optimized just about everything possible except housing, the biggest ticket item by far for a Manhattanite.

Before I discovered the MMM blog, I bought too much apartment, price-wise.  I very much wanted to stay in a pricey, fashionable area, just a 20 minute subway ride from work and close to friends.  Now, many of the friends have moved away, subway fares and property taxes have doubled, and due to an insane move by the coop board, my building went from high maintenance and low debt (with prospect of paying off the underlying mortgage within a few years) to a high debt, high maintenance combo that could be all sorts of trouble in 2020 when that debt is due to be refinanced.

I've always been aggressive about saving and paying off debt, with the result that in about 10 years I went from a net worth in the red by more than 1x my annual income (student loans), to a stash (including home equity) of about 6x my annual income.  The mortgage is my only debt.  It is a 15 year at 2.75% (!!) with a balance of ~$270,000.  My apartment has gained about 15% in value in the past year, and real estate prices here are acting like it's 2006-2007 all over again.

I am considering moving to a very nice Manhattan neighborhood that is walking distance from work.  I could buy an 800 square foot apartment (compared to my current 500 sq feet) while knocking ~$100K off the mortgage balance.  HOWEVER - monthly expenses taking tax deductibility into account, and excluding mortgage principal payments, would not go down by much.  Maybe $200/month at most.

Does it make financial sense to move now, or is it better to wait a few years when I might be able to move and be mortgage free?  I'm also thinking that if housing prices here keep going up, it will work out very much in my favor to wait since my current apartment will increase in value more than the ones I'm interested in buying.  Of note, I have no specific retirement plans because I very much enjoy my job (medical research), but reaching FI would allow me to work at a relaxed pace without fear of having my salary severely cut due to lack of grant funding, which my dept has been threatening to do to other people.  I'm fine on that score now but who knows what the future will bring.

Many thanks!!