Movin’ on up

Enough about NYC real estate! Let’s go to the LBYM mailbag for … an NYC real estate question.

Dear LBYM:

We’re apartment shopping in NYC (dear God, help us). In a shocking turn of events, it’s actually a buyers’ market here, with prices falling and interest rates probably as low as they’re going to be for awhile.

My husband thinks we should stretch and go for a much more expensive—30% more expensive!—apartment than we would normally go for because it is:

a) huge, so we’d be able to grow into it and potentially keep it as our forever home, which means not having to potentially upsize again in a few years after having kids (and thus avoid an additional round of transaction costs);

b) significantly under the typical NYC price per square foot in a cool neighborhood;

c) a condo (vs. a co-op), so we’d be able to rent it out if we needed to downsize or leave NYC;

d) zoned for live-work, making it flexible;

e) doable as our income will theoretically go up over time.

I worry that this is putting all of our eggs in one investment basket (real estate). He thinks that NYC real estate is basically a sure bet, which historically isn’t really wrong. It just makes me uneasy. I also worry about what happens if one or both of us loses our job.

What should we do?

Sincerely,

Every Wife Out There

Dear Every Wife Out There,

Men—they’re so optimistic! Everything can go in only one direction—up! More money! More kids! More trendy artisanal pickled … things! And all just around the corner, literally and figuratively. On one level, it’s rather sweet and childlike. On another level, you have to wonder where they were in 2008.

Reading between the lines, you’re essentially asking me what everyone, at some level, wants to know. What does the future hold? Guuuuurl, if I knew, would I still be doing this? You speculate about job loss, but that’s just the tip of the iceberg when it comes to all the things—mostly out of our control—that might affect your tenure in a deluxe apartment in the sky. Will parts of Manhattan be under water in 30 years? On the flip side, are you potentially buying beachfront property? What’s going to happen with taxes? Will rural populists with pitchforks come for elitist, Allbirds-wearing urbanites? Is LaGuardia the worst airport in America? (Yes … yes, it is.)

When I read savvy letters like yours, I’m always surprised that survey after survey reveals a persistent knowledge and confidence gap between men and women in regards to money management. From digital investing platform Ellevest: fewer than half of women surveyed felt satisfied with their knowledge of finances. From Student Loan Hero: nearly 90 percent of men feel good about how well they manage money. Women? 80 percent.

Why am I surprised? ’Cause money management, at its core, is risk management. And who’s had to manage more risks their whole lives? Women. To take just one of many examples, a chart making the rounds on social media recently showed how men and women answer the question, What steps do you take on a daily basis to prevent yourselves from being sexually assaulted? For most men, the question doesn’t even register. Women? Open the floodgates.

Financial risks abound, too. Women live longer, are paid less, and are more likely to leave the workforce to care for others. Dealing with these realities has likely taught scores of women solid principles of money management, possibly without their realizing it.

So, yes, look at you weigh all the considerations like a boss! Alas, I can’t tell you whether to buy the apartment. Do the due diligence you can do—run the numbers, make contingency plans, actually live on the big-apartment-big-mortgage budget before you buy … and let me know when the housewarming party is!

Knowledgeably and confidently,

LBYM

If you have a burning financial question, send us an email at info@livebeneathyourmeans.com. Answers may appear in a future post.