NEW YORK, Feb. 15, 2016 /PRNewswire/ --
Key facts:
- The median StreetEasy Tipping Point in New York City is 4.9 years, meaning the costs
of renting a home in New York City
would exceed the costs of buying a comparable home in just under
five years.
- Among the five boroughs, the longest tipping point is in
Manhattan: 7.4 years. The shortest
is in Queens: 3 years.
- Of the nearly 300 neighborhoods tracked in the analysis, more
than half have a median tipping point of five years or less.
- Neighborhoods with the shortest median tipping point (less than
2 years) are concentrated in Queens, while the majority of neighborhoods
with the longest median tipping point (over 10 years) are located
in Manhattan and the Bronx. – In New York City, rent and sales
prices continue to reach new highs, making homeownership seem
unachievable in such an expensive, competitive market. However, for
most buyers who plan to live in New York
City for at least five years, the financial benefits of
buying a home outweigh the costs of renting, according to a new
StreetEasy® analysis.
In New York City, rent and
sales prices continue to reach new highs, making homeownership seem
unachievable in such an expensive, competitive market. However, for
most buyers who plan to live in New York
City for at least five years, the financial benefits of
buying a home outweigh the costs of renting, according to a new
StreetEasy® analysis
The StreetEasy Tipping Point is a new metric that approximates
the median number of years it would take for the costs of renting a
home to equal or exceed the costs of owning a comparable home in
the same areai. The greater the tipping point, the
longer a resident would need to stay in a home for it to make
financial sense to buy rather than rent.
City-wide, the median tipping point is 4.9 years, meaning the
typical New Yorker would need to live in New York City for nearly five years before it
would be financially advantageous to buy a home rather than rent.
This is significantly greater than the national median of just 1.9
years, as tracked by Zillowii. Of all the neighborhoods
tracked in StreetEasy's analysis, there are only 16 neighborhoods
with a tipping point of two years or less, most of which are in
Queens. More than half of all
neighborhoods (59.3 percent) have a median tipping point of five
years or less.
The StreetEasy Tipping Point is determined by examining a
variety of costs and benefits related to renting and buying,
including property tax rates, closing costs, maintenance costs,
home price appreciation and median down paymentiii. On
the rental side, some costs considered include median asking rent,
rental insurance rate, a broker's fee, security deposit and rent
inflationiv.
"It's often said that it takes eight years to become a
true New Yorker, but it takes considerably less time for
homeownership to make sense here – going against what many New
Yorkers have been trained to believe," said StreetEasy data
scientist Alan Lightfeldt. "Although New York is known for
being a transient city, for those who plan to stay over five years
it would be financially beneficial to own rather than rent. The
buy-rent decision certainly takes longer to fall in favor of buying
in the city than it does across the country, but owning is actually
not an impossible dream."
Among the five boroughs, Manhattan has the longest median tipping point
at 7.4 years, followed by the Bronx (4.6 years), Brooklyn (4.4 years), Staten Island (4.1 years) and Queens (3 years). Within each borough, there
are strong contrasts between neighborhoods. Though Manhattan has the longest borough-wide tipping
point, two of its neighborhoods – West Harlem and Roosevelt Island – have some of the shortest
tipping points in New York City,
at 1.2 and 1.4 years, respectively. Rounding out the top five
neighborhoods with the shortest median tipping points are
Queens' Howard Beach (1.4), Briarwood (1.4) and Alley Park (1.1
years).
On the opposite end of the spectrum, 36 neighborhoods have a
tipping point above 10 years. The majority of those neighborhoods
are in Manhattan, a reflection of
the borough's prohibitively high asking rents, sales prices and
down payment requirements. Carnegie Hill, Little Italy, Nolita,
Soho and Tribeca all share a median tipping point of 31+ years,
meaning homeowners would end up repaying their 30-year fixed-rate
mortgage before ever reaching the tipping point.
The Bronx is home to the second
largest share of neighborhoods with the longest tipping points, but
fueled by opposite factors than Manhattan. Relatively lower down payments and
slower price appreciation contribute to the borough's neighborhoods
with the longest tipping points, including Melrose (31+ years), City Island (18.5 years),
Country Club (18.3 years), and Pelham Gardens (16.2 years).
Longest Tipping
Point, by Borough
|
Shortest Tipping
Point, by Borough
|
Neighborhood
|
Tipping
Point
|
Neighborhood
|
Tipping
Point
|
Manhattan
|
|
Manhattan
|
|
Carnegie Hill, Little
Italy, Nolita, Soho,
Tribeca
|
31+ years
|
West
Harlem
|
1.2 years
|
Midtown
|
25.5 years
|
Roosevelt
Island
|
1.4 years
|
Flatiron
|
16 years
|
Civic
Center
|
2.3 years
|
Brooklyn
|
|
Brooklyn
|
|
Boerum
Hill
|
16.4 years
|
Old Mill
Basin
|
1.7 years
|
Carroll
Gardens
|
15.8
years
|
Starrett
City
|
1.9 years
|
Dumbo
|
13.4 years
|
East New
York
|
2.1 years
|
Bronx
|
|
Bronx
|
|
Melrose
|
31+ years
|
Belmont
|
1.6 years
|
City
Island
|
18.5 years
|
East
Tremont
|
1.8 years
|
Country
Club
|
18.3 years
|
Norwood
|
2.4 years
|
Queens
|
|
Queens
|
|
Douglaston
|
6.5 years
|
Alley Park
|
1.1 years
|
Long Island
City
|
6.1 years
|
Howard
Beach
|
1.4 years
|
Fresh
Meadows
|
5.8 years
|
Briarwood
|
1.5 years
|
Staten
Island
|
|
Staten
Island
|
|
Stapleton
Heights
|
31+ years
|
Clifton
|
2.1 years
|
Randall
Manor
|
19.2 years
|
Arlington
|
2.2 years
|
Lighthouse
Hill
|
8.9 years
|
Elm Park
|
2.5 years
|
A complete list of tipping points for all boroughs and
neighborhoods can be viewed at
http://streeteasy.com/blog/tipping-point-buy-versus-rent/.
About StreetEasy:
StreetEasy is New York
City's leading local real estate marketplace on mobile and the
Web, providing accurate and comprehensive for-sale and for-rent
listings from hundreds of real estate brokerages
throughout New York City and the
major NYC metropolitan area. StreetEasy adds layers of
proprietary data and useful search tools to help home shoppers and
real estate professionals navigate the complex real estate markets
within the five boroughs of New York City, as well
as Northern New Jersey and the Hamptons.
Launched in 2006, StreetEasy is based in the Flatiron
neighborhood of Manhattan.
StreetEasy is owned and operated by Zillow Group (NASDAQ: Z and
ZG).
StreetEasy is a registered trademark of Zillow, Inc.
i The
StreetEasy Tipping Point is the number of years it would take for
the accumulated costs of renting a home to equal or exceed the
costs of buying a comparably sized home in the same area.
StreetEasy calculated the tipping point for all five boroughs and
across nearly 300 neighborhoods by comparing the costs and benefits
of homeownership in an area to the costs and benefits of renting
using recorded sales data collected from the city and asking rent
data on StreetEasy. The tipping point for an area is the median
tipping point for all homes where the above calculation is
possible. The current tipping point values are based on full year
2015 recorded sales and asking rent data.
|
ii The
breakeven horizon is the number of years after which buying is more
financially advantageous than renting (at the precise breakeven
horizon one can be indifferent between buying and renting). We
computed the breakeven horizon for each household by comparing the
costs of owning a home versus renting a home at the end of each
year for 30 years (assuming the house is purchased using a 30-year
fixed mortgage). Our buy versus rent analysis incorporated all
possible costs incurred when purchasing a home as well as those
incurred when renting a home to make the comparison between these
costs as realistic as possible. The full methodology can be found
here:
http://www.zillow.com/research/rent-vs-buy-breakeven-horizon-analysis-methodology-updated-3549/
|
iii
StreetEasy estimates the median down payment as a share of the
total price of a home and is determined by mortgage data provided
by the New York City Department of Finance. It is the inverse of
the median loan-to-value (LTV) ratio for all homes in a geography
in which mortgage data is included in the transaction's documents.
The typical down payment in dollar value is determined by
multiplying the median recorded sales price in a geography by the
inverse of the median LTV. This is only an approximation of a
typical down payment size and is not an actual recorded
number.
|
iv All
inputs for calculating the StreetEasy Tipping Point are as follows
- costs of homeownership: 30-year fixed-rate mortgage (prevailing
rate updated monthly), property tax rate, purchase costs, selling
costs, maintenance costs per year, renovation costs, homeowners
insurance, capital gains tax rates, NYC mortgage tax, NYC mansion
tax (where applicable), median down payment amount for area, home
price appreciation according to 12-month StreetEasy Price Forecast
and inflation. All inputs for calculation costs of renting: rental
insurance, broker's fee, rental deposit, condo fees, down payment
investment return potential, rent inflation according to 12-month
StreetEasy Rent Forecast
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/buying-beats-renting-in-just-under-five-years-in-new-york-city-300219778.html
SOURCE StreetEasy