Suburbs or New York City: where it is actually more profitable to live
The question of whether to move to the suburbs or stay is a perennial topic of discussion for many New York families. It usually comes down to the cost of housing and travel time. While the pandemic has provided new reasons for moving to the suburbs, the cost-effectiveness of living outside the metropolitan area compared to living in New York remains the main criterion. Brick Underground.
“Remember that this is very individual,” said Jennifer Ross. She is an agent for Compass, which has helped dozens of New Yorkers move to the suburbs.
Here are some estimates to help you get an idea of the cost of moving to the suburbs versus living in New York City.
1. Prices in the suburbs can be 25-50% lower than in the metropolis
In the suburbs, you can increase the area of \uXNUMXb\uXNUMXbhousing and get more benefits. This is what attracts many buyers. Especially those who have large families who dream of the seemingly unrealistic - to buy an apartment with three bedrooms and two bathrooms in New York.
According to The Elliman Report, the average price per square foot of an apartment in Brooklyn for the last quarter was $1. In Montclair it is $035.
When it comes to housing sizes, Sean Elliott, broker for Nest Seekers International, observed that the suburbs always win. “In the suburbs, you can get twice as many square meters for half the price than in the city,” he said. Savings are 25-50% when buying in the suburbs compared to the city.
“You can easily find a house on Long Island for less than $600 per square foot,” Sean said. The suburban homes he sells are usually located on several acres of land. There are tennis courts, swimming pools, wine cellars and garages. For comparison, the average price per square foot in Manhattan in the third quarter was $1.
In the suburbs, you can buy a house for $800 or $000, depending on the area. But a three-bedroom apartment in the city costs almost $900 million.
2. Maintenance and upkeep costs are higher in the suburbs
Of course, outdoor space - even without a tennis court or swimming pool - requires maintenance. Lawn care, home repairs, snow removal - all this must be included in the budget. “When you buy a home, you always have to consider potential renovations and yard work,” a Compass agent warned.
This is exactly what Paul Smith found out. Three years ago, he and his wife moved from the Upper West Side to Westport, Connecticut, in search of space and good schools for their two children. They sold an apartment with three bedrooms and two baths. Then they bought a house with five bedrooms and four baths with a pool. The house is located 10 minutes drive from the beach.
Smith says the pool costs him about $3 a year to maintain. He also spends about $000 a year on landscaping, which includes lawn mowing, snow removal, fall and spring cleaning. He knows neighbors who spend up to $10 a year on their yards. Such numbers make $000 in total expenses or maintenance fees for a condominium or co-op a relatively good deal.
A large single-family home in the suburbs will also have higher utility bills. Annual heating and cooling costs for Smith are $600 per month.
Simon Brady, a certified financial planner and founder of Anglia Advisors, moved from Brooklyn to Long Island in the mid-1990s. He says he was completely unprepared for the high costs in the suburbs. The cost of gutter maintenance and roof repairs will force you to pay much more attention to weather forecasts.
“And peer pressure or unkind looks from neighbors will eventually force you to pay a landscape designer,” Brady said. – You also need to think about extra sofas, chairs, tables, beds, lamps, shelves, plumbing fixtures, backyard furniture and a grill. It's thousands of dollars. Or rather, tens of thousands of dollars.”
Smith says he spent $28 on furniture at Restoration Hardware when he moved into a 000-square-foot home.2).
3. Living in the suburbs requires the extra cost of a car or two.
According to AAA, the average annual cost of owning a car this year has reached $10, or $728 per month. Fuel prices are the most significant factor, but this is a significant increase over previous years. In 894, the cost of owning a car was $2020 per year.
If you're planning to move from being a family without a car to being a family with two cars in the suburbs, you'll need to shell out an additional minimum of $20 a year. If you already have a car, you will realize that insurance is cheaper in the suburbs. Smith said his insurance premiums were halved when he moved to Connecticut.
There are suburbs that are more walkable than others. And it matters for the number of cars you plan to park in your driveway. Ross calls Larchmont, Pelham and some river towns like Hastings and Dobbs Ferry more walkable.
In New Jersey, these areas are Montclair, Maplewood, Summit, and Chatham.
Connecticut has neighborhoods in Greenwich and Westport that are within walking distance of shops, schools, or the train station.
4. Commuters are more expensive
If you need to get to the city, you should think about the cost of the trip and the time it will take. A round trip from Westchester to Manhattan will set you back over $1000 per month if you choose to drive yourself. If you use the Metro-North train, your monthly expenses will be $150-$200 depending on where you live and how often you commute. For those who travel to the city less often, these costs can be significantly less.
Many customers pay about $500-$600 a month to park in the city, Ross says, and moving to the suburbs saves them those costs. “It's not like you're saving that money when you move to the suburbs — it's being spent on other things,” she said.
5. Property taxes are usually higher in the suburbs
State and local budget decisions will affect your tax payments. Another important factor is the presence of a developed commercial area in the region. In New York, the average effective tax rate is less than 1%. It is calculated by dividing the total tax amount by your taxable income. In the suburbs, the average effective tax rate often exceeds 2%. Davon Barrett, a certified financial planner at Francis Financial, explained that it can vary greatly by school district.
On the subject: A guide to the five boroughs: which area of New York to choose for life
You can find property tax rates on the websites of local governments. On average, you have to pay between $9 and $000. Smith used to pay $20 a year in taxes and city maintenance, and now pays $000 a year in property tax alone.
But these higher property taxes can be offset if you transfer kids from private urban schools to public suburban schools. Ross has clients with three children who pay $80 in property taxes on expensive new housing in the suburbs. But they are happy because they are no longer paying $000 for a private school.
6. Moving from New York can lower your income tax.
If you move outside of New York, you will no longer pay city income tax. Depending on your income and tax bracket, the savings can be significant. For example, more than $30 if you earn $000 a year.
7. Suburban home insurance can be more expensive.
Home insurance, according to Barrett, depends on the degree of risk associated with your suburban home. He noticed that the annual premium is usually in the range of $1 to $200 per year.
“You can have two identical houses. But if one of them is by the sea, it will cost more because the risk associated with this house is higher,” he explained.
Barrett has helped dozens of clients considering moving to the suburbs. “Although the city is convenient, you cannot pay the price for space and fresh air,” he concluded. The specialist noted that both in the city and in the suburbs, the same rule of thumb applies: you should not exceed 30% of your income for basic mortgage interest, taxes and insurance.
8. Events for families are often less competitive in the suburbs
In addition, Ross noted, kindergartens and activities for children are usually much cheaper in the suburbs: “The cost of every component of life is more expensive, but in the suburbs it is a less expensive consideration.”
Gym classes and sports activities for children are cheaper in the suburbs, as are preschools.
Demand for real estate in the suburbs of Long Island, like almost all suburbs in New York, has grown during the pandemic. “Suburbs like Long Island are known for their excellent public school systems. Whereas in Manhattan, it takes another $60 a year to send a child to [a private school]. Even on Long Island, private schools cost half as much as in the city,” stated Sean Elliot.