I was recently quoted for an AOL article about a new feature that real estate website Trulia recently created.
Check out the article here: http://www.walletpop.com/2011/01/24/better-to-rent-or-buy-check-out-trulias-city-by-city-index/ .
Trulia's graphic says that New York City is a city where the costs of owning are higher than the costs of renting. While this was true for many years from 2001-2009, it is less true now. And, as I say in the article, the benefits of owning may still be there, they just take longer to achieve in a place like New York.
Here are some reasons that people might want to purchase their home:
1) To stabilize their housing costs: Rents tend to go up every year. In a place like NYC, rents can jump a few hundred dollars from year to year. Buying a property with a fixed interest mortgage helps stabilize housing costs for long periods of time (you will still have increase in maintenance, property taxes, and home insurance over the life of your mortgage, but the percentage year over year is much lower than the potential increase in rents).
2) To have a place of your own: Ever lost out on a security deposit because you had to paint your bedroom blue or risk going insane from all that vanilla off-white? Not a problem if you own your own place. How about those "landlord special" stoves and countertops? Even in a nice building they are calculated to appeal to the most potential renters. If you want a custom kitchen, you are pretty much out of luck. For liability purposes you can't even install a custom stove without your landlord's permission. Purchasing a place gives you more control. You might have to pass the work by a co-op board, but they won't deny you because they don't like your choice of backsplash tile.
3) To increase equity/net worth: To me this is the least important reason to purchase a primary residence, but it's still a benefit that you will acquire over time: instead of paying rent to your landlord - and receiving nothing long term - you are gradually building ownership of a property, and creating net worth for yourself. This benefit applies ONLY IF YOU SPEND 8-10 YEARS in your apartment at minimum.