Is 2025 Your Year for Home Ownership?
Sponsored by Nikki Thomas
New year, new home? That’s what some of you may be thinking this month as we kick off 2025.
But how do you know whether or not this might be the year that you can finally become a homeowner?
Here are some things you need to think about to help you decide.
Personal Circumstances
Contrary to popular belief, the most important consideration when deciding whether or not you should buy a home isn’t what’s going on with the market. It’s your personal situation.
It doesn’t matter if interest rates are low or if prices are coming down if you haven’t saved up enough money. Or if there isn’t anything out there that you actually want to buy. Or if you’re completely unclear on your housing needs for the near future.
So focus first on you and what you want and need in terms of home ownership.
Take a close look at your finances and ask yourself these questions:
How much can you realistically put towards a down payment?
Would you have money left over after your down payment to cover closing costs? What about emergency expenses down the line?
How do you feel about your job stability for the next year? What about the next 3 or 5 years?
Home ownership is a big financial investment. You need to feel confident that you’re prepared to take it on along with any surprises along the way. And trust me - there will be surprises.
You should also think about your short term and long term housing needs and wants. For example, do you expect your household size to grow in the coming years or stay the same? Do you want to stay in your current neighborhood or do you want to explore other options?
If you feel like your circumstances are stable and unlikely to change, then that tilts things in favor of owning a home. But if you need more flexibility with your housing situation in the coming years, then renting may make more sense.
Market Factors
Once you’re clear on your personal situation, then you can turn your attention to market factors.
Interest rates are, of course, an important item to consider. They’re something that a lot of buyers are rightfully laser focused on.
But, in my opinion, they aren’t the most important market factor for buyers to think about when deciding whether or not they should buy.
Instead, I think buyers would be better served by focusing on the available inventory in their desired areas.
Even though interest rates impact the overall cost of ownership, buying may still make sense if there are well priced properties that fit the parameters of what you’re hoping to find.
For example, the median monthly price of owning a 2 bedroom/1 bathroom apartment in Brooklyn for the month of November 2024 was $3,793. This was inclusive of monthly costs such as maintenance and common charges, and it was still $1100 less than the average cost of renting a 2 bedroom in Brooklyn.
Now the caveat here is that these are boroughwide numbers. So the rent versus buy equation will look different in each neighborhood (e.g. you’re going to pay higher prices in Park Slope than you would in Prospect Lefferts Gardens or Sunset Park). But it underscores the point here which is that you need to pay closest attention to your needs and what you are looking for, not general market trends.
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Now that you know what you should be thinking about, you might be wondering how on earth are you supposed to go about figuring all this out on your own.
For example, what, exactly, do you need to understand about your finances to get a handle on where you stand? And how do you figure out how much of a down payment you could afford?
Fortunately, I’ve got just the resource for you.
The First Time Buyer Bootcamp is a free email series delivered daily to your inbox to help you find out if you’re really ready to become a homeowner in New York City (it recently got a shout out in the New York Times). Even if it turns out that 2025 isn’t going to be your year, the bootcamp will at least get you started so you can get on the right track.
Head on over via this link to learn more and sign up!
Thank you to Nikki Thomas!
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