NEW YORK,
June 22, 2017 /PRNewswire/
--
Key facts:
- The median StreetEasy Tipping Point in New York City is 5.6 years, meaning the costs
of renting a home in New York City
would exceed the costs of buying a comparable home in just over
five and a half years.
- StreetEasy's analysis found an increase in tipping points
across Manhattan, Brooklyn, Queens and the Bronx since this time last
year[i]. Manhattan's tipping point increased the most –
up 18 months, while the Bronx rose
just two months.
- Of the 85 neighborhoods where StreetEasy tracked a change in
the tipping point, 78 percent have tipping points that were longer
than this time last year.
- Among the four boroughs in StreetEasy's analysis, the longest
tipping point is in Manhattan at
7.7 years. The shortest is in the Bronx at 1.4 years.
- The longest tipping points are concentrated in Manhattan, while the shortest tipping points
are concentrated in the Bronx and
Queens.
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 to renting it. For most prospective buyers in
the city, buying a home becomes a better financial decision than
renting it in 5.6 years, a full year longer than this time last
year, according to the Q1 2017 StreetEasy® Tipping Point
analysis[ii]. This is
significantly greater than the national median of just over two
years, as reported by
Zillow®[iii].
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.
Manhattan had the longest
median tipping point at 7.7 years in Q1 2017, 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 percent) 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 half to 7.7 years. Tipping points for
Brooklyn, Queens and the Bronx all increased by smaller amounts: 10,
seven, and two months, respectively.
"Buying a home is an incredibly personal decision that should be
rooted in research and examining what makes sense for your
financial situation. One key factor to consider is how long you
plan to live in it. This timing can have a big impact on your
ability to recoup the costs of buying a home," said StreetEasy
Senior Economist Grant Long.
"Affordability remains a challenge for New Yorkers, but for those
who have saved up for a down payment, our data shows that in some
neighborhoods buying can quickly become more financially attractive
than renting."
Within each borough, there are strong differences between
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.
A map revealing tipping points for all the New York City neighborhoods in StreetEasy's
analysis, along with a new interactive tool to help New
Yorkers find their personal tipping point, can be viewed at
http://streeteasy.com/blog/nycs-tipping-point/.
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]
Staten Island was excluded
from StreetEasy's analysis due to lack of sufficient data for the
borough.
[ii]
The StreetEasy Tipping Point is the number of years it would
take for the costs of renting a home to exceed the costs of buying
a comparably sized home in the same area. StreetEasy calculated the
tipping point for four of the five boroughs and across nearly 100
New York City 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. Costs of homeownership include mortgage principal and
interest; applicable federal, state and city taxes; homeowner's
insurance; projected closing costs; and maintenance fees and common
charges as listed on StreetEasy. The projected homeownership costs
are net of mortgage income tax deduction benefits. Costs of renting
include broker's fees, renter's insurance, and monthly rent. 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 Q1 2017 recorded sales and asking rent
data.
[iii].
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). Zillow 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). Their 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/
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/new-yorkers-see-a-longer-time-to-break-even-on-their-home-purchase-in-2017-300478098.html
SOURCE StreetEasy