Rent or buy: what is the best deal for those who are looking for housing in New York

It is difficult to navigate on your own, which is more profitable: to buy or rent real estate in New York. Therefore the site Streeteasy created a parameter that allows you to calculate everything instead of you.

This parameter is called "Tipping Point" (Tipping Point). It takes into account a number of market and macroeconomic factors to weight the costs of renting and buying a home in New York. Knowing exactly where you want to live, there is an opportunity to find out if it makes sense to become a homeowner here.

Benefits of Buying a Home

In New York, an average of 5,8 years is required in order to buy a house on the conditions when its purchase will cost less than rent. This figure is much more than the national record - it is a little over 2's. But to understand whether it makes sense for you to buy housing, look at the tipping point for the area in which you want to buy real estate, and then think about how long you plan to live there.

Districts and neighborhoods of New York

Tipping points are widespread in New York City, ranging from 30 years in areas such as Manhattan and Soho to less than 3 years in the Bronx. Those who wish to buy property in Manhattan must be prepared to live in their home for approximately 12 years before it pays off. In Brooklyn and Queens, this average is about 4 years.

New York Borough Midpoints

Bronx 2,33

Brooklyn 4,17

Manhattan 11,75

Queen 3,50

Staten Island 4,58

Flexible approach to choosing a district

There is good news for buyers who are flexible in choosing an area to live in, as they can usually find an area in the neighborhood of the place of residence originally selected.

For example, Long Island City home buyers are facing a tipping point in 5 years. But if you are open to Sunnyside, your tipping point will decrease to just over 3's.

On the subject: The best neighborhoods of New York to buy your first home

Please note: this does not mean that an area with a lower tipping point is better, or that you should not buy in Long Island City if you plan to stay there for a short time. This indicator is intended solely to indicate the time that you have to live in this area of ​​New York, so that the financial cost of the purchase was less than the cost of rent.

How the tipping point works

The tipping point weighs rental costs (monthly rental payments, brokers' commissions and insurance) with purchase costs. These include: down payment, mortgage, property taxes, housing maintenance costs, and the opportunity cost of down payment and down payments on assets such as stocks and bonds. The model also takes into account rental growth forecasts and housing prices for each market.

Thus, the 11,8-year tipping point in Manhattan does not mean that renting a home here is cheap. It just shows: because home prices in Manhattan are so high, buyers must pay more upfront costs, which are longer in time, to recoup the costs of the buyer.

Investments and other factors affecting the tipping point

Most of the factors that are included at the tipping point, such as future mortgage rates, price increases and stock market dynamics, cannot be perfectly predicted and are beyond the control of the buyer. However, your tipping point may vary depending on the size of your down payment.

But the decision to purchase housing in New York, of course, is made by everyone for himself. StreetEasy's Tipping Point is just a tool to help potential home buyers avoid some financial assumptions about this.