How long does it take before buying a NYC pad pays off?

Owning beats renting in Brooklyn, Queens: report

New York /
Feb.February 15, 2016 08:45 AM

Buying an apartment in Manhattan is not just more expensive than elsewhere in the city – it’s also significantly overpriced compared to renting.

A median homebuyer in Manhattan would need to own an apartment for 7.4 years before owning becomes cheaper than renting, according to a new study by StreetEasy. The national median is 1.9 years.

The listing site calculated its comparison of the annual cost of renting and buying by including factors such as inflation, tax deductions, asset appreciation, opportunity costs of investing in a home and rent increases. On aggregate, these cost factors decrease over time for a homebuyer relative to a renter, meaning after a certain number of years owning becomes cheaper than renting. The greater number of years it takes, the more expensive a for-sale market is compared to rentals.

The Manhattan median of 7.4 years illustrates why developers have been so keen in recent years on building condo towers or converting rentals to condos: for-sale apartments command a significant premium compared to rentals. The median number of years until the “tipping point” – as StreetEasy calls it – is reached is a mere 4.6 years in the Bronx, 4.4 years in Brooklyn, 4.1 years in Staten Island and 3 years in Queens. The citywide average is 4.9 years.

There are significant variations within boroughs. In Tribeca, the tipping point is a staggering 31 years but in West Harlem it’s a mere 1.2 years. And Brooklyn’s average of 4.4 years may seem low compared to Manhattan, but median homebuyers in Boerum Hill will have to wait 16.4 years until owning becomes cheaper then renting.


Related Articles

arrow_forward_ios
Single-family rentals are increasingly seen as a more realistic alternative to ownership, given the hot housing market and income inequality. (iStock)
Single-family rentals soaring in hot housing market
Single-family rentals soaring in hot housing market
(Getty)
Manhattan buyers shun fixer-uppers
Manhattan buyers shun fixer-uppers
Chinese developer willing to sell Manhattan supertall site at big loss
Chinese developer willing to sell Manhattan supertall site at big loss
Chinese developer willing to sell Manhattan supertall site at big loss
Cushman acquires 40% stake in Greystone lending business for $500M
Cushman acquires 40% stake in Greystone lending business for $500M
Cushman acquires 40% stake in Greystone lending business for $500M
(iStock)
LI rental review board setting standard for local rental permits
LI rental review board setting standard for local rental permits
1 North Moore and Platinum Properties CEO Khashy Eyn (Google Maps, Platinum Properties)
Tribeca penthouse rents for $85K per month, possibly setting NYC record
Tribeca penthouse rents for $85K per month, possibly setting NYC record
Two penthouse apartments were sold at 150 East 78th Street with the intent of combining them (Compass)
Double penthouse asking $33M is priciest listing snapped up
Double penthouse asking $33M is priciest listing snapped up
Two of the eleven properties under threat of foreclosure (Google Maps)
Mack Real Estate may “strip” club owner of properties
Mack Real Estate may “strip” club owner of properties
arrow_forward_ios

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

Loading...