It's more expensive now than ever to buy (and rent) property in New York City, but new and surprising analysis shows that owning is worth it in most neighborhoods after a rather short amount of time. StreetEasy has evaluated the tipping point, or the median number of years it would take for the costs of renting a home to equal or exceed the costs of owning a comparable home in the same area, for 300 neighborhoods throughout the city, and found that in 59 percent of them it becomes financially advantageous for New Yorkers to buy rather than rent if they plan on staying put for five years.
In Manhattan, that number balloons to 7.4 years owing in part to neighborhoods like Carnegie Hill, Little Italy, Nolita, and Soho where it takes a whopping 31 years for that metric to tip in favor of the buyer, owing to high rents and sales prices and high median down payments. But in West Harlem, that number becomes a mere 1.2 years, which is amongst the lowest of any neighborhood throughout New York City. It's joined by Roosevelt Island, where it takes 1.4 years for that metric to tip in favor of the buyer.
Following Manhattan, the boroughs with the longest tipping points are the Bronx (4.6 years), Brooklyn (4.4 years), Staten Island (4.1 years), and Queens (3 years). In Brooklyn, it becomes advantageous for buyers to own property in Old Mill Basin after 1.7 years, Starrett City after 1.9 years, and East New York after 2.1 years. As can be expected, the tipping points in brownstone Brooklyn neighborhoods are considerably higher. In Boerum Hill, Carroll Gardens, and Dumbo it takes 16.4, 15.8, and 13.4 years for buying to make more financial sense than renting.
The tipping point is affected by home value appreciation or depreciation, which in New York is mostly on the up and up. The median resale value of New York City homes rose 31 percent between 2005 and 2015, StreetEasy found. Higher home value appreciations lower its tipping point, but that doesn't mean that pricey neighborhoods should have quicker tipping points. Just look at brownstone Brooklyn.
For the nitty gritty behind StreetEasy's calculations, hop on over to the site.
· Tipping Point: When Buying Beats Renting in New York City [StreetEasy]