Living in New York City, especially in Manhattan and in some parts of Brooklyn, is expensive. In fact, it is often ranked as the most expensive real estate in the country — and the world. People who live in New York City frequently wonder how much money they would save if they lived outside the city and commuted to a job in Manhattan. I’ve set out to highlight some factors to consider when exploring the costs of living in Connecticut and working in Manhattan, compared with living and working in Manhattan.
Connecticut (particularly the southwestern portion) is a popular place to purchase a home due to its proximity to New York City. Connecticut is known for its ample green space and parks, recreation options, excellent public schools and small towns. The commuter train line along the southern border, plus lines north in some locations, make commuting to Manhattan easy.
While comparing a home with a yard in Connecticut and an apartment in New York City is a bit like apples to oranges in terms of lifestyle, a financial comparison would focus on several components:
— Home prices.
— Real estate taxes
— Income taxes
— Commuting and transportation.
— Insurance.
— Cost of living.
[The Guide for First-Time Homebuyers in New York]
Home Prices
Manhattan real estate is expensive. In the fourth quarter of 2023, the median sales price of a two-bedroom condo was $2.14 million, according to the Q4 2023 market report by Douglas Elliman and Miller Samuel. Bigger apartments cost exponentially more, with the median price of a three-bedroom clocking in at $4.315 million and four-bedroom and larger condos at $8.2 million. Of course, those are median prices, and the bulk of newly constructed luxury condos cost far more per square foot than an average post-war construction with fewer bells and whistles. Pricing is also deeply affected by location and building services and amenities.
Co-ops sell for significantly less than condos in Manhattan. Condos, especially new development condos, are more expensive because they are brand new and offer many more amenities than a co-op. Additionally, it is much simpler to purchase them (you don’t have to submit a board application with all of your financials) and you can buy them in an LLC, trust or any other ownership structure. You also have much more flexibility with owning a condo such as they can be bought as an investment, with no restrictions on renting them out, and you can finance them as much or as little as you’d like.
The median price of a two-bedroom co-op in New York was around $1.266 million in Q4. Three-bedroom co-ops’ median price was $2.285 million, and that of four-bedroom or larger co-ops was $4.9 million (a little more than half of the median condo price at that size). Per square foot, co-ops are also far more affordable than condos: The average price per square foot for a condo was $2,150 in Q4, for a co-op, it was $1,222.
The growing demand for homes in Connecticut, which started during the pandemic and has remained strong, forced housing prices to surge. With housing inventory down due to strong pandemic sales, home prices remain high, and houses remain on the market for a very short time. However, prices are still significantly lower than those in Manhattan.
Connecticut home prices also range dramatically based on size, condition, and location. For example, according to Realtor.com, the current median listing price for a home in Greenwich, considered one of the most expensive areas in Connecticut, is $3.8 million, with a median price per square foot of $756. On the other end of the spectrum, the median listing price for homes in Stamford is $609,000, with a median price per square foot of $317. But keep in mind that Stamford has both house and apartment inventory, whereas Greenwich tends to be predominantly larger houses and lots, which affects the median home price.
Real Estate Taxes
Connecticut has some of the highest real estate taxes in the country. The rate changes depending on which town you reside in (and, in some cases, which part of town). The state’s average effective property tax rate (taxes as a percentage of home value) is 1.96%, the third-highest of any state in the U.S., according to SmartAsset. Real estate taxes are impacted by what services the town provides. Some towns will provide public water, sewer, trash removal, school busing, etc., as part of the services covered by the real estate taxes, while other towns with lower rates might not include these services, which must then be arranged privately at an additional personal cost.
In New York City, property tax rates are quite low. The average effective property tax rate in the Big Apple is just 0.98%, according to SmartAsset. If you own a condo in New York City, you pay taxes directly to the city, but in the case of a co-op building, the real estate taxes are paid as part of your building’s monthly maintenance fees, since the building pays the taxes directly to the city, and a portion of that amount can pass through as a deduction to the individual owner based on how much of the monthly payment goes toward the building’s mortgage. In condos, your deductions are based on your personal mortgage payments. All city services, such as water, trash and snow removal, etc., are covered for New York City residents.
Keep in mind that while the real estate taxes may be lower in New York City, the cost of a home is generally higher, so the amount you pay might be the same or even more in New York City compared with Connecticut, for less space.
[What Should You Consider When Deciding Between a Condo vs. House?]
Income Taxes
Disclaimer: It’s important to consult with a tax professional or check the latest tax laws for both states to understand the exact tax implications based on your specific circumstances. If you opt to live in Connecticut but work in New York City, you are still required to pay New York state income taxes (even if you work remotely or have a hybrid work schedule). You will not have to additionally pay Connecticut state income tax (given that you can take a credit in Connecticut for any taxes paid to New York state). However, New York City residents must pay city income tax in addition to state income tax. Depending on your income, New York City income tax ranges from 3.078–3.876%. You will therefore still pay more income tax by residing in New York City.
Commuting and Transportation
If you live in Connecticut and commute to Manhattan, you will need a car and will likely commute by train. This is the fastest and easiest means of transportation to and from Manhattan. Monthly commuter passes to Grand Central Station from Connecticut depend on your home location, but range in price from $280 per month from Greenwich to $366 per month from Westport.
You can also opt to drive, but the cost of parking in Manhattan will cost you over $600 per month, depending on the neighborhood, plus gas and tolls.
Living in Manhattan can mean a car-free existence. Since monthly parking spaces average $600 or more (again, depending on the neighborhood), many New Yorkers forgo a car and can easily walk or take public transportation to the office.
[Read: Is It Better to Rent or Buy a House?]
Insurance
Connecticut has one of the lowest annual homeowner’s insurance costs in the country. Homeowners insurance in Connecticut typically costs between $1,300 and $2,100 per year, based on quotes for $300,000 in dwelling coverage and $100,000 of liability coverage.
Of course, rates vary widely depending on the location and size of your home. The average policy in New York City typically costs at least $2,400 to $4,400 per year, based on quotes from several top providers for $500,000 of dwelling coverage and $100,000 of liability coverage. The cost of coverage spans a wide range depending on the value of your home and its contents.
Living in Connecticut will require having a car, which will require car insurance. The average cost of car insurance in Connecticut is $1,500 per year. Rates are higher in Manhattan and Brooklyn, but, as previously mentioned, you don’t necessarily need a car.
Cost of Living
Many daily costs can be higher in Manhattan, such as groceries, restaurants, dry cleaning, etc. However, some new services, such as grocery delivery services and online shopping, have offset some of those costs.
There are expenses embedded in living in a home that also need to be calculated, such as lawn and garden maintenance, home maintenance and repairs and the cost of heating and cooling a large home. Living in the suburbs also requires using your car multiple times a day to achieve nearly any errand, so your gas costs will also be higher (unless you use an electric vehicle).
Connecticut vs. New York City: It’s Personal
It is clear that it is far more expensive to live in New York City than to live in Connecticut. Even if you factor in commuting into the city for work from Connecticut, it is still less expensive to live in Connecticut and commute to New York City daily.
However, there is a dramatic lifestyle difference that you must take into account. The decision completely depends on the individual and their preferences. If you are someone who likes a more suburban lifestyle with a yard and trees, less busy surroundings and the ability to drive everywhere, then Connecticut is the right choice for you. But if you are like me, and like to be in the middle of a bustling city with endless offerings of culture, dining, and arts at your fingertips, there is no place like New York City, despite being very expensive.
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Is It Cheaper to Live in Connecticut and Commute to New York City? originally appeared on usnews.com
