In July the rental market in Manhattan hit a post-recession high. Not since 2007 did rents reach such numbers. Some of the causes can be attributed to the tightening restrictions for mortgage financing, lack of new construction and the high foreclosure rates. Gone are the days when landlords offered free rent incentives and broker fee concessions.
Many people have asked me if their landlords can renew their leases by an increase of a few hundred dollars per month and the short answer is: YES. Depending on your lease terms legally your landlord has the right to do it, and with inventory being so low, landlords have increased rents inline with every big rental company in the city and with no slow down in inventory turnover.
Since rents are astronomical, now is a great time to buy more than than ever before - that is, if you qualify. Rents cost almost as much as owning a home. Certain types of properties, especially new developments that take advantage of the New York City "421A" tax abatement offer low property taxes for a 10 year period. The Feds recently announced that they would keep interest rates low for the next two years which puts those that qualify for financing to be in a very good position to get a good deal and keep their monthly costs down comparable to renting.
An important fact to remember is that typically for a first time homebuyer you can write off up to 85% of your mortgage payments against your your taxes. So at the end of the day, you can walk away paying less and owning more. For example I recently had a customer purchasing in a COOP 1 bedroom. She put 35% of the closing price as downpayment and recieved an interest rate of 3.75%. Although her credit is stellar and the building's financials are sound, deals like this are still out there.
So before you sign a new lease or your renewal, think about your monthly costs versus purchasing a home and you will see how much better off you could be.
By Mukul Lalchandani