Buying a home in New York City is a daunting task that requires the perfect cocktail of available funds, gumption, and luck in the real estate world (as we’ve learned with this go-around of Renovation Diaries.) It also requires the exceedingly important choice of where that first home will be. The whole process starts, essentially, with one question: In what NYC neighborhoods does it make sense to buy rather than rent?
For New Yorkers with finite funds, buying in Tribeca makes less sense than, say, Park Slope. But what neighborhoods in New York make the most sense to buy in versus rent? Real estate investment platform Sharestates crunched the numbers to determine which neighborhoods are better to buy in using calculations on the return on investment (ROI), after repair value (ARV), the increase in demand over the past year (based on real estate loans in the area), and the area’s median sales price.
The New York City neighborhood they found makes the most sense to buy in is Richmond Hill. The relatively far-out Queens neighborhood, bordering Kew Gardens, provides buyers with the highest return on investment at 12 percent. It also has a relatively modest median sales price of $542,500.
Where it makes sense to buy versus rent in NYC, 2017
| Neighborhood | ROI | ARV | Increase in Demand (2016 v. 2017) | Median Sales Price |
|---|---|---|---|---|
| Neighborhood | ROI | ARV | Increase in Demand (2016 v. 2017) | Median Sales Price |
| Richmond Hill, Queens | 12% | 42% | 200% | $542,500 |
| Bed-Stuy, Brooklyn | 11% | 52% | 75% | $745,000 |
| Ocean Hill, Brooklyn | 10% | 63% | 100% | $746,000 |
| Longwood, Bronx | 10% | 56% | 300% | $727,500 |
| Flatbush, Brooklyn | 10% | 28% | 400% | $520,000 |
Bed-Stuy comes in as the second neighborhood where it makes sense to buy versus rent, with a return on investment of 12 percent, an after repair value of 52 percent and an increase in demand over the past year of 75 percent. Rents in Bed-Stuy also outpace other neighborhoods on this list. Ocean Hill, Brooklyn and Longwood, Bronx claim spots as the third and fourth neighborhoods that make the most sense to invest in.
In fifth, with the lowest median sales price and highest increase in demand of the five neighborhoods is Flatbush, Brooklyn.
“For the areas experiencing the most development, it may make sense to buy rather than rent at this time (while development is still underway),” says Sharestates CEO Allen Shayanfekr. “Once those areas experience significantly less vacancy, the price points will change dramatically.” As with all things in this fine city, better act fast.