It has been five years since we ended our last rental in Manhattan in favor of becoming homeowners in the ‘burbs. We wanted more space, our own place and to finally leave behind the land of all white walls.
It’s an interesting time though. Rental incentives have been on the rise in the NYC metro area with complexes looking to lure in new tenants. With the option to work from home, many have chosen over the last year plus to leave the city in favor of the suburbs or countryside. But will the trend last?
Renting versus buying
We are still homeowners but are beginning the process to search for a bigger space. It’s amazing how quick you outgrow what you have. It remains an especially challenging time though to choose to do so. The housing market is still super hot. Interest rates are low, inventory is low and it is a total seller’s market. Realtors can’t keep inventory it is all turning over so quickly.
My dad recently sold his house and it was a completely different experience than when anyone in our family bought before. It was only on the market for one long weekend. After 65 people scheduled appointments to come through there were multiple offers with minimal asks of the inspections.
This high demand with minimal asks puts lots of pressure on those looking to buy. I know people who put in offers on house after house that were continually outbid on by buyers with all cash offers, some of which were buying for investment purposes.
- If you have to come up on your down payment terms, can you afford to? Are you willing to?
- Are you open to an expedited close? Sometimes that can be an attractive offer to a buyer.
- Are you willing to waive an inspection? Or, at minimum, keep to only inspecting for big issues?
The current rental reality
We’ve started to consider if renting would be a wiser choice for us as a temporary solution. The rental market though comes with its own challenges. While monthly rent feels like less of a commitment than purchasing a home, that decision comes with its own unique challenges in the current market.
The last year (well, year plus) has led to a lot of inequality in the housing market. At a time where Americans were struggling on multiple fronts, research shows that it was high income areas that saw decreases in housing costs whereas low income areas saw rent increases. Counties in suburban areas in rural and suburban areas actually saw rents climb by 7%, which is wild to me since I’m used to that being the opposite.
The New Jersey rental market experienced this as well. Articles like this one note an increased popularity in counties not usually on the list, like Sussex County’s Sparta and Hunterdon County’s Clinton. Median rents in Hoboken, which is only a relatively quick ride into Manhattan, were down 8.3% year over year and if you go a bit further, Jersey City is down even more, a 12% decrease there year over year. However go a bit further out to Marlton, and those rents increased 8.8% year over year.
The trends discussed on the home purchase market have also been noticeable in the rental market — with increased demand for larger rentals with more space to accommodate more time at home. Even with businesses beginning to reopen, people are still looking for housing options to give them that added room as most people continue to spend more time at home than they did pre-pandemic. Doing your research and being patient right now is key.
Local businesses have been impacted during this time as well. It’s been remarkable the number which have managed to hold on through all the closures, but the dynamic of towns within our county (Union) has changed with the times as well. There are now an increased number of noticeably vacant storefronts as we drive along Route 22. Those leaving the city in favor of the suburbs are experiencing a slightly different version of the areas to which they’re flocking.
It remains to be seen if the trend continues or if there is a return back to pre-pandemic levels. It’s definitely a time to research and be strategic in your housing search to ensure you’re getting the best option you can that meets your needs — both for today and for the future.
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