Dear Big Move,
I am a 66-year-old high-school teacher in Tucson, Ariz. I have a home downtown, near the University of Arizona, which is valued at $610,000. I have about $105,000 left on my mortgage. I have two roommates who pay rent, which helps me pay off my mortgage.
It’s my ambition to retire in four years, and move closer to my daughter in Brooklyn. I’d like to be a snowbird, and keep my home that I own in Tucson, and possibly buy a condominium or co-op apartment in Brooklyn to spend spring, summer and fall. I want to keep my home in Arizona, so I can be around my son and my granddaughter in the winter.
Should I sell the house in Tucson in four years when I retire and put all the money toward buying a home in Brooklyn? Or should I keep the house in Tucson and rent an apartment in New York while I am there?
I am a little concerned about the lack of water in Arizona over the next 30 years, and summers are getting even hotter. I love Tucson. It’s a progressive place in a red state. Also, things could change for the worse.
Big City Dreams
‘The Big Move’ is a MarketWatch column looking at the ins and outs of real estate, from navigating the search for a new home to applying for a mortgage.
Do you have a question about buying or selling a home? Do you want to know where your next move should be? Email Aarthi Swaminathan at TheBigMove@marketwatch.com.
Dear Big City Dreams,
I love that you’re moving to New York to retire. From personal experience, I’ve seen more college students or early career types move to the city, eager to make a mark. But I get that you want to be closer to your daughter, and also avoid the crazy heat in Arizona!
To answer your question, on whether to buy or rent: It really depends on how long you plan to be a snowbird and stay in Brooklyn. If you plan to stay for a long time (or forever), it may make more sense to keep the Tucson home and buy in Brooklyn, if you can afford it.
But if you’re not fully sure about moving to the Empire State for an extended period of time, it may make sense to rent and feel the city out before you plunk the cash down for a home.
“Renting in New York City right now is a horror show. ”
But a big red, flashing warning sign for you: Renting in New York City right now is a horror show.
One real-estate agent, Frances Katzen, who is with Douglas Elliman, told me that it’s gotten so competitive in the city to buy or rent that it’s really “Darwinism at its finest.” In Katzen’s view, the rental market is on a “sugar high.”
According to data from Douglas Elliman, the average rent for a studio apartment in Brooklyn is $2,824, as of this June. A one-bedroom would set you back $3,240 a month. Landlords can hike the rent much further, “because supply is so limited,” Katzen added, with demand rising as the back-to-the-office picture evolves.
Not only are you going to pay through the teeth in rent, you’re also going to be stuck with the mortgage on the Tucson home.
If you’ve got the financial means to do so, consider keeping — and renting — the Tucson home and investing in a home in Brooklyn as well.
Sure, buying a property in the city is a pricey proposition. Inventory is low. The median sales price for an apartment (whether in a condominium or a co-op and regardless of size) in Brooklyn as of the second quarter of this year was up by 8.2% to a new high of $985,000, according to another report from Douglas Elliman.
With rates averaging around 5.54% for a 30-year fixed-rate mortgage, that’ll push your borrowing costs up further.
But if you’re planning to stay in Brooklyn for a bit, given how high rental prices are, it may be a good move to put that money toward a second home.
You mentioned that you had roommates — so you’re familiar with running a rental. Since you’re planning to spend winters back in the desert, you could always rent out your New York place on Airbnb
or do a short-term lease in the winter, to get some income from the property.
And if you decide to keep the Tucson home, you’ll probably get around $1,800 in rent per month that could go toward your new mortgage (for what it’s worth, some investors are still banking on people moving to the Sun Belt). You’ll also have the flexibility of pulling the plug on Brooklyn, should that not work out.
Additionally, if you are intending to share your home with your daughter, perhaps she can help out with the bills, making the option to purchase a home a lot more attractive. She can also save a little bit of money on rent, if you decide to charge her below market rate!
Living in the city will be a special experience for you, as you’ll definitely have no shortage of entertainment options during your retirement. And living near your daughter will make it even more special.
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