How many people dream of making it big and moving to Sioux Falls, South Dakota? Undoubtedly, there are some. But those few are only a drop in the bucket compared to those who dream of living in New York. I’ll put it this way: They don’t tear down landmark hospitals to construct luxury condos priced in the eight digits in Sioux Falls.
New York living has always had a hefty price tag. However, recent trends in the national and local economies have exacerbated the situation, making it even more difficult to find affordable places to live in internationally desirable city centers such as New York and San Francisco.
But it’s not impossible. The growing income and wealth gaps in the US mean there are burgeoning ranks of people enjoying the better end of the economic bargain. These men and women are willing to pay premium prices for downtown apartments, thus creating incentive for city planners to tear down more affordable housing in favor of luxury condominiums.
At the same time, overseas investors are pouring money into American real estate, and heirloom properties on the coasts and near prestigious universities are hot targets.
On the other end of the spectrum, Millennials are increasingly skipping home ownership and opting for the convenience of city life, which raises the demand for affordable units even higher. Many of the remaining affordable options are actually rent-stabilized units in the hands of longstanding residents. The options in this category are swiftly disappearing, even with controls in place to prevent this.
Even those who might want to buy homes are having a hard time doing so. Getting a home loan is more difficult today than ever before, with banks still smarting from the recent subprime loan crisis. Lending requirements are high, and new construction is down. This unpleasant equation puts more pressure on the rental market.
Mix all these factors together, and you’ve got a recipe so expensive, only a Manhattan bistro would dare put it on the menu.
One thing that generally isn’t a problem, however, is landlord greed. There are stories of people putting bunk beds held together by towing straps in “cozy mini-studios” while charging $1,750 a month, but those are few and far between.
Most of the time, the rent is realistic. As property values go up, so do property taxes. The costs of property maintenance, advertising and inspections also never go down. Being a landlord is expensive.
So, for prospective renters, the challenge is not how to haggle concessions from a rapacious landlord. The challenge is being patient and finding an apartment listed in their price range. Here are four tips to help you do just that:
1. Set a budget.
Having a price range assumes you’ve laid out your monthly budget and determined how much you can afford to spend on rent. This is the first and most important step of all. In expensive markets like New York and San Francisco, you can expect to spend half your income on rent.
We’re all tempted to commit to a little more than we intended in order to land a nicer place, but the trade-off is rarely worth it. Besides, spending the money on a two-bedroom apartment when a studio will do seems a bit wasteful. This should be common sense, but I still hear stories from old friends who drove themselves into the danger zone simply from spending above their means.
2. Look into trending alternatives.
There is one trend working in favor of price-conscious denizens, and that is micro apartments and micro homes. These are not two-story homes chopped into 17 units: These are purpose-built dwellings designed to be functional in less than 300 square feet of space.
The idea is still very new, so most developers are still in the drafting phase. But as time goes on, the possibilities in this realm will continue to grow.
3. Use the buddy system.
Living on your own is great. But when you’re starting out in the big city, that dream of having your own place should probably be put on hold. One or more roommates can cut rent costs by nearly 20 percent in New York City, with even better numbers in other big cities.
If you already own your own place, consider renting out a room to a friend or family member. The additional income can offset taxes, HOA fees, utilities and even the costs of maintenance or upkeep.
4. Look for easily accessible housing.
This one is a little trickier to quantify. But when you’re searching for your next place to live, ask yourself some questions about your potential commute. How far is the walk to the subway, or how far is the drive to the interstate?
Some people like to walk, while others don’t mind driving. Therefore, it's all about personal preference. But keep these criteria in mind. You’ll be glad you did the next time a co-worker complains about a terrible hike in the snow.
Stick to these principles, and you’ll be able to find an apartment or house that ticks all the right boxes. You’ll be happy living there. You'll happily make your daily commute, and you'll still have some funds left over to live the life you truly want.