The price of parking in NYC
It’s not too surprising that this article, about the high cost of a parking spot in Manhattan, is one of today’s most popular articles on the New York Times website. It’s more surprising that parking spots are being sold for $225,000 only blocks from where my parents live.
In the article, one prospective buyer laments not having purchased a $165,000 dollar spot months earlier. I thought I’d sharpen my finance skills and figure out whether a place to park is really worth $200,000. A little googling led me to this site which suggested spots in the area rent for about $500 dollars a month. In contrast, the $200,000 space costs about $1000 dollars a month after a $20,000 down payment and a 30 year mortgage at 6% interest.
If you sell your space after a few years for about what you paid, the whole thing will definitely be a huge waste. If you keep the space for 30 years, however, you’ll probably be able to sell the space for much more than you paid. If the space doubles in value, you’ll make $100,000. That’s still not as much as you’d have made investing your $20,000 down payment along with the extra money you were paying in mortgage payments.
If the spot triples in value, I’m pretty sure you come out way ahead. You make $300,000, and save any increase in rental costs (the cost of renting would probably triple as well). Also there’s probably a tax write-off from the mortgage that’d save you additional money.
In conclusion, calculating whether you should buy a parking space is an extremely time-consuming procedure. As someone who does not have $20,000 dollars, or even a driver’s license, I deeply regret this post.