The costs of renting a home in New York City would exceed the costs of buying a comparable home in 5.6 years, according to local online real estate marketplace StreetEasy’s Tipping Point analysis.
The analysis finds an increase in tipping points across Manhattan, Brooklyn, Queens and the Bronx since this time last year. Manhattan’s tipping point increased the most – up 18 months – while the Bronx rose just two months.
Among the four boroughs in StreetEasy’s analysis, the longest tipping point is in Manhattan at 7.7 years, followed by Brooklyn (4.9 years), Queens (2.7 years) and the Bronx (1.4 years). Since this time last year, tipping points increased in more than three-fourths (78%) of the neighborhoods in New York City where StreetEasy observed a change. The increases were even more drastic in the more expensive areas of New York City. The tipping point for Manhattan, the borough with the city’s most expensive homes, had the largest increase over the prior year – up a year-and-a-half. Tipping points for Brooklyn, Queens and the Bronx all increased by smaller amounts: 10, seven and two months, respectively.
Rising mortgage rates, higher home prices and a softening in the rental market in many parts of New York City have lengthened the time it will take to break even on a home purchase in New York City compared with renting. For most prospective buyers in the city, buying a home becomes a better financial decision than renting in 5.6 years, a full year longer than this time last year, according to the analysis. This is significantly greater than the national median of just over two years, as reported by Zillow.
Within each borough, there are strong differences among neighborhoods. In Brooklyn, a prospective homeowner may find tipping points as long as 30 years in a neighborhood like Boerum Hill, meaning homeowners would end up paying their 30-year, fixed-rate mortgage before reaching their tipping point. Conversely, neighborhoods like Fort Greene, Downtown Brooklyn and Brooklyn Heights all reveal tipping points under five years.
The StreetEasy Tipping Point approximates the median number of years it would take for the costs of renting a home to exceed the costs of owning a comparable home in the same area. The greater the tipping point, the longer a resident would need to stay in a home so that buying makes more financial sense than renting.