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.
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.
The StreetEasy Tipping Point analysis 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.
Of the 85 neighborhoods where StreetEasy tracked a change in the tipping point, 78% 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.
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.