Should I rent now or buy?

Should I rent now? Or buy?

Rent: “The unusual thing right now is that both the rental and sales markets are weak,” says Stuart Elliott, editor of The Real Deal magazine. Usually, when one is up, the other is down. But if you need to move, renting may be your best bet. “There probably hasn’t been a better time to be a rental customer in Manhattan since 2002,” says Douglas Wagner, president of Benjamin James Real Estate. Manhattan, he explains, has a wider selection because (a) developers are renting hard-to-sell units, (b) people are losing jobs and dropping out of the mix, and (c) students, who usually take the cheap spots, have booked it to other boroughs.

Buy: Fluctuations in the housing market take place at the city level, not the national level, says Andra Ghent, a real-estate professor at Baruch College’s Zicklin School of Business. So even if sales have tanked in your hometown, that doesn’t mean the same will happen here. With all this doom and gloom, people “smell blood in the water,” Wagner says. The Wall Street types who usually gobble up real estate are potentially out of the mix next year, so the dream of a good deal is alive. But Elliott cautions: “It’s always hard to call the bottom if you’re looking to buy.”

What would it take for prices to drop 1970s-style?

Rent: “We’re nearer the beginning of this” in terms of a sluggish market, says Jonathan Miller, president and CEO of the Miller Samuel real-estate appraisal firm. As the economy contracts and folks lose their jobs and firms stop hiring, you can expect the rental market to “show weakness,” or get cheaper. So far, though, rents aren’t speeding downhill. For example, at the Crest on 63 Wall Street, the average monthly rent for a one-bedroom in 2007 was $3,010, according to ApartmentRatings.com. Now it’s $2,950. Even if layoffs mount, “new condo supply is tapering off as demand is tapering off,” Miller says. If prices dip, they’ll do so gradually.

Buy: This year, so far, real-estate transactions are down more than 20 percent. But activity is one thing. How far and how fast prices drop is anyone’s guess. Nothing short of a meteor hitting the city seems likely to drag prices down to what we saw in the ’70s anytime soon. Why? The widespread speculation that drove real estate down elsewhere in the country didn’t happen to the same degree here. (Antiflip co-op boards had our backs on that.) What’s more, New York is a city where people want to live. Remember, Mayor Bloomberg has predicted there will be 1 million more of us by 2030. And they’ll all need places to stay.

Where are the best deals?

Rent: One neighborhood on Stuart Elliott’s list is the Financial District, where many office buildings were converted to residences full of amenities. Craigslist recently listed a one-bedroom in a building with a doorman, garage, health club, roof deck and laundry with a month’s free rent and no broker’s fee. Williamsburg has also caught Elliott’s eye because he’s seeing something he’s never seen before: rent-to-own properties, meaning that your monthly check counts toward a down payment. On Curbed, there have been two reports of this option in new developments, the Northside Piers and the Decora.

Buy: Manhattan is still a tough nut to crack, but prices are off 20 percent in parts of Brooklyn (which have been hit hard by foreclosures on adjustable-rate and subprime mortgages), including such would-be trendy neighborhoods as Bushwick and Bed-Stuy. Elsewhere in Brooklyn, prices are said to be down 15 percent. According to a second-quarter 2008 report from Prudential Douglas Elliman, prepared by Miller Samuel, transactions in Brooklyn are 26 percent fewer, and the median sales price is down 0.4 percent from last year, to $525,000.

Broker’s fees, mortgages— what’s going on?

Rent: With higher inventory, landlords are ready to deal. So are brokers. Some landlords are throwing in a month’s rent. One post on Craigslist recently offered free rent until January on a Morningside Heights three-bedroom. In some cases, landlords are also covering broker’s fees (that damned 15 percent), and in others, brokers will negotiate that number. The last time this happened, just after September 11, 2001, Wagner says, the incentives trickled off after a few months when the market picked up. But right now, Craigslist is rife with free-month deals.

Buy: Basically, banks are looking for higher down payments (15 to 20 percent) and credit scores (more than 700), to minimize their risks. But things could get even tighter soon. In an effort to help home owners, Congress recently increased the cap on mortgages Fannie Mae and Freddie Mac could buy or insure from $417,000 to $729,750. That cap, which keeps interest rates down, is only in place through the end of the year. So come January, if Congress doesn’t extend the aid, more mortgages will be subject to higher interest rates, and it will get tougher to buy here. After all, $417,000 goes only so far. Anyone see a meteor coming?

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