The Real Deal New York

Rent or buy? It takes 6 years to recoup cost of purchasing a home in NYC

May 17, 2013 02:30PM

The old calculus of buying versus renting hinges on a host of personal factors, not least of which is the investment cost. In New York City, an average home buyer needs to spend 6.1 years in a chosen dwelling to recoup the cost of purchasing that unit, according to new figures from Zillow. 

Depending on how long a resident wants to live in a given home, that time investment could tip the scales toward one option or the other. Of course, the break-even point varies widely across neighborhoods.

The three neighborhoods with the lengthiest time investments are Manhattan’s Carnegie Hill and the West Village and Brooklyn’s Manhattan Beach. Average residents need to stay in their purchased homes for 11.9 years, 10.6 years and 10.2 years, respectively, to break even.

On the other end of the spectrum, the Parkchester section of the Bronx ranks as the neighborhood with the shortest break-even point — 2.5 years — followed closely by the Bronx’s Melrose and Belmont, which have respective break-even times of 3.2 and 3.4 years.

Meanwhile, for both the Upper West Side and the Upper East Side, the time is just shy of 9 years. In the hot Chelsea market, it would take 6.7 years to recoup the costs. —Zachary Kussin

  • ralphpetrillo

    It really depends on timing. If you bought when market was correcting from 2008 to 2010 you did well. If you are buying now you are buying near the top. It may take 14 to 21 years to recoup if interest rates start to rise.

  • pjm

    Your argument that it depends on when you bought will determine when you recoup your investment is too simple and uninformed. It depends on a host of factors including mortgage rate, co-op maintenance fees or condo common charges, real estate taxes, personal income-tax bracket, filing status, house price appreciation rate, rent inflation rate, downpayment amount, closing costs to buy and sell (don’t forget transfer taxes and flip taxes). Yes there is more but to do a complete accurate and comprehensive analysis > try the IB Calculator from for Free 1-Day Trial

  • This article is way too general and doesn’t even touch on other factors that affect closing costs (i.e. co-op vs. condo, financing vs. cash, price under $1M or over $1M,).

    Closing costs for a co-op are a lot lower, even if you are financing. This is mainly because you don’t pay a mortgage recording tax on the mortgage amount when buying a co-op, which adds almost 2% for the amount you’re financining, Also, you won’t have to buy title insurance (just a lien search – very minor expense), which is required in condo and real property purchases.

    Also, if your purchase price is under $1M, the “Mansion Tax” is not triggered saving a buyer 1% of the purchase price.

    The closing costs for most co-op purchases, if under $1M, even when financing, are usually only about $5,000 – $6,000.