You have to live in New York City more than 18 years to make buying a home worth your money

New York /
Jan.January 24, 2016 10:00 AM
 

To rent or to buy? It’s a question that most of us will eventually face, particularly city dwellers. If you’re a New York City resident, where the median sales price for homes is $1.2 million, the answer may may be simpler than you thought.

“Perhaps the most important factor to consider when making this buy or rent decision is how long you plan to stay in your home,” writes personal finance site SmartAsset in a recent report.

“If you’ll only be in town a year, renting will almost always be your obvious best choice … You probably don’t want to spend the time and money necessary to buy a house: think down payment, closing costs, loan charges, appraisal fees and so on.”

Of course, everyone’s situation is unique, and there is no clear answer to the age-old “to rent or buy” question.

However, to help you decide, SmartAsset calculated the breakeven point — the point at which the total costs of renting become greater than the total costs of buying — for 29 major cities.

For New York City, the typical household would have to stay put for 18.3 years to make buying a home worth their money.

To calculate the breakeven points, SmartAsset compared the total costs of buying and renting for a household earning $100,000 a year, drawing data from the US Department of Housing and Urban Development and the US Census Bureau 2012 American Community Survey. For the buying scenario, the research team assumed a mortgage rate of 4.5%, closing costs of $2,000, and a down payment of 20%.

Read the full methodology.

Thanks to New York City’s competitive housing market — which means higher prices, fees, and closing costs — you may want to stick to renting unless you plan on being in the Big Apple for the long haul.


Related Articles

arrow_forward_ios
(Image by Wolfgang & Hite via Dezeen)

Hudson Yards megadevelopment inspires a new line of sex toys

Hudson Yards megadevelopment inspires a new line of sex toys
Cammeby's International Group founder Rubin Schron and, from top: 194-05 67th Avenue, 189-15 73rd Avenue and 64-05 186th Lane (Credit: Google Maps)

Ruby Schron lands $500M refi for sprawling Queens apartment portfolio

Ruby Schron lands $500M refi for sprawling Queens apartment portfolio
Wendy Silverstein (Credit: Getty Images)

Wendy Silverstein, co-head of WeWork’s real-estate fund, is out

Wendy Silverstein, co-head of WeWork’s real-estate fund, is out
Nile Niami and "The One" mansion (Getty)

Country’s most outrageous spec home to hit market

Country’s most outrageous spec home to hit market
Slate Property's CEO Martin Nussbaum (West End 87)

Scale Lending originates $38M inventory loan for unsold UWS condos

Scale Lending originates $38M inventory loan for unsold UWS condos
Council member Barry Grodenchik (Getty; iStock)

“Absolute craziness”: Critics slam bill requiring sprinklers in every apartment

“Absolute craziness”: Critics slam bill requiring sprinklers in every apartment
Shenzhen New World chairman Wei Huang and José Huizar (Getty)

“Casino Loyale”: Developers, ex-LA deputy mayor indicted in Huizar corruption scandal

“Casino Loyale”: Developers, ex-LA deputy mayor indicted in Huizar corruption scandal
Knotel CEO Amol Sarva (Sasha Maslov, Knotel, iStock)

Evictions, unpaid vendors and back rent: Lawsuits mounting against Knotel

Evictions, unpaid vendors and back rent: Lawsuits mounting against Knotel
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...