down payment vs investing in high cost of living area

[StressLess]

hi all,

just wondering what most peoples thoughts are regarding saving for downpayment vs investing.

NYC currently is outrageously expensive, buy vs rent calculations put me solidly better off in the rental category (unless i want to stay in a tiny 1 bedroom with a family for 10 years!!!)

currently maxing out 401ks, just starting to think about taxable accounts vs continuing to save for downpayment of a nyc dwelling. 

My comfort range for mortgage with 20% down would be 600-800k, do i stop saving after I get to that 20% or should i be siphoning off some of that savings into equities to hedge the potential of never being able to own here?

[mcampbell]

NYC currently is outrageously expensive, buy vs rent calculations put me solidly better off in the rental category (unless i want to stay in a tiny 1 bedroom with a family for 10 years!!!)

You said the math says its a better idea to rent. Thats generally true in the NYC market, even tho the rents are high its still generally better then buying.

[MustacheAndaHalf]

Vanguard Total Stock Market ETF is down -7% in the past 3 weeks (year to date).  That could be another reason to invest now, at lower prices (note that's no guarantee it doesn't drop further).

[JLee]

If buy vs rent calculators say renting is better, why buy?

[naners]

Where are you looking in NYC, and what assumptions are you using that the calculator says rent? DH and I just bought in prime Brooklyn at the price range you're looking at and the calculator came way out in favor of buying. To make it concrete, the interest plus co-op fees on our 2BR is less than our rent was in a less nice neighborhood. Maybe you are looking at single family or 3BR apartments, but even then the rents for comparable places must be very high.

Don't forget that if you're looking at a co-op, and most places are co-ops, you will need a minimum of 1year of mortgage payments plus co-op fees in cash in the bank to satisfy the co-op board. So yes you need more than 20% down. The board will be stricter than the bank!

[StressLess]

thanks for replies.

If buy vs rent calculators say renting is better, why buy?

I've seen rents increase quite a bit in the last 10 years, so basically a hedge....also less of a financial decision and more of looking to put down roots someplace without moving every 2-4 years.

Where are you looking in NYC, and what assumptions are you using that the calculator says rent? DH and I just bought in prime Brooklyn at the price range you're looking at and the calculator came way out in favor of buying. To make it concrete, the interest plus co-op fees on our 2BR is less than our rent was in a less nice neighborhood. Maybe you are looking at single family or 3BR apartments, but even then the rents for comparable places must be very high.

Don't forget that if you're looking at a co-op, and most places are co-ops, you will need a minimum of 1year of mortgage payments plus co-op fees in cash in the bank to satisfy the co-op board. So yes you need more than 20% down. The board will be stricter than the bank!

Mostly looking in brooklyn and parts of queens.  Honestly, can't find anything decent in the 2BR range for under 900k, the market has surged the last two years.  If we could find something for 600 we would do it without thinking but between the common charges and fees for buying and selling its hard to justify.

did you buy in 2015 or a few years before?

[naners]

We bought in August for around 750 in a nice part of BK. Casually keeping an eye on properties seems to show similar stuff in our area for similar prices or a bit better. No you won't get a newly renovated 2BR in Park Slope for those prices. Not sure what your expectations are for internal renos: our place has a 90s kitchen and bath but still fully functional, nice layout, laundry in unit etc. Costs for buying a coop are very low, around 6k. Yes it's more on the way out but the calculator takes this all into account. PM me if you want to talk more, I also highly recommend our RE agent.