Here Are NYC Neighborhoods Where It’s Better To Buy Not Rent
A new survey crunches the numbers and answers the old chestnut — Is it better to buy than rent in NYC?
Living in Gotham has just got way too expensive for most parents. The lure of easy parking, affordable mortgages and box chain convenience has many writing off their New York dream life as pure fantasy. But what if you’re simply not willing to acquiesce to the mini-van and yard work? Is it at all possible to stay in the city—assuming you didn’t buy your house last millennium or sell your start-up to Silicon Valley?
For most of the middle class, buying an abode in which to put your kids to bed in the city that never sleeps, is enough to keep you up at night. If the notion of renting gets in your craw, frittering away your kids college fund while your landlord’s offspring book their passage to Harvard, then real estate website StreetEasy has devised a metric you may wanna pay attention to. Termed the “tipping point”, it measures how long it will take to own a home in a particular neighborhood to match the cost of renting in the same locale. Basic premise is this. A mortgage payment never increases—but rents always do. At some point the lines cross. Thrown into the buyers pot are tax deductions and appreciation. The lower the tipping point (or T.P.), the faster you should call your bank for a loan.
Clearly, there are some neighborhoods (Tribeca, Soho, anyone?) where getting a mortgage payment to approximate the rent might as well be something you’ll hand down to your grand kids (Actually, the tipping point there is 19 years). But there are other places, like Inwood in Upper Manhattan, where the T.P. is a very tolerable 1.6 years. In Manhattan the average T.P. is 9.2 years—which means it will take that long for buying to yield a better return than renting. In Brooklyn it is shorter—at 3.6 years. But, of course, there are wild fluctuations from neighborhood to neighborhood.
What’s surprising about the survey are the Brooklyn numbers. They generally prove that buying is still a good deal. Neighborhoods such as Fort Green (T.P. – 2.6 years) and Prospect Heights (T.P. – 3.6 years) are mostly considered to be out of reach for many buyers without trust funds. However, the data shows that, after 3 years or so, you would have been far better off forgoing a few vacations—and stashing your cash for a down payment on a condo instead. Even towny Windsor Terrace (T.P. – 3.5 years), a stone’s throw from Prospect Park with a median asking rent of $2,500 and a median sale price of $750,000, seems like a good bet to save up for your dream pad.
It’s a little shocking to see Fort Green as a marginally better bet to buy than Sunset Park (T.P. – 2.8 years)—but the numbers don’t lie. The median asking rent in Sunset Park is $2,000 a month, and the median sale price is $487,500—which is 25 percent lower than the borough-wide median sale price of $631,000. Where Fort Green scores its points, is because it far more expensive to rent there than in Sunset Park. Plus, there has been a slew of new construction in Fort Green, meaning that there are more buying options (studios and one-bedrooms,) which, in turn, pushes the median sale price down to $682,620.
Of course, it’s not an exact science and the survey serves as a snapshot for the time in which it was conducted. If mortgage rates increase or rents stagnate or drop, then all bets are off. But the survey offers some good news. On the whole, if you thought you could only afford to rent in Brooklyn, you were wrong. There’s a condo out there with your name written on it.
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