One of the things people who aren’t from New York ask me sometimes is whether or not the rent in New York is really as crazy as they think it is. “Is it really that expensive to live there?”
Instead of asking me, all they’d have to do is read The New York Times’s Real Estate section every weekend, and have a good laugh, like I do.
This week includes a tale about 34-year-old Claudia Beqaj, a marketer for a medical device company, who paid $1,400 a month to illegally sublet a studio owned by NYU in Washington Square Village:
As her salary rose, her taxes did, too. She had few tax deductions. Her accountant told her he was struggling to find something she could write off, she said.
The news that she might have to vacate her rental was the incentive she needed to hunt for a place to buy. Her price range was around $400,000. She had socked away $40,000, or 10 percent of that amount, in a savings account. It would go toward her down payment.
Okay, a few things here.
The first is that this young woman was earning so much money, it benefited her tax-wise to buy a home. The second is that you’d think that $40,000 is a lot of money for one person to save up by the time she or he is 34 and ready to buy, get this, a studio, or one-bedroom apartment. We’re not even talking about a single-family home! We’re talking about an apartment that can essentially fit a bed and a few other belongings.
But apparently, it is not a lot of money—not in New York City. When Beqaj expressed interest in a $400,000 studio apartment in Greenwich Village, she was told she needed $80,000 for a 20 percent down payment, plus “two years of mortgage and maintenance payments in reserve.” Which means she’d need at least $100,000 in the bank to even be considered for the apartment.
She then says this: “I was never really a saver. I love shopping and going out. I realized how naïve I had been about the whole financial situation of renting versus buying. I was completely deflated.”
It’s just so interesting to me that a 34-year-old woman who has $40,000 saved up thinks she’s not really a saver, and that someone who has $40,000 saved up to buy a place in New York City can be so easily deflated. The real estate market here really is that wild. Folks, if you are saving money, you are a saver. We all go at our own pace, but the fact that you sock any money away at all is a good thing.
I’ll let you read the rest of the story, but Beqaj does end up buying a place. As a result, Beqaj’s accountant says that she’ll “save around $1,000 a month in taxes.”