In NYC, 5.6 Years is ‘Tipping Point’ Between Renting, Owning

StreetEasy, New York said 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.

The company’s Tipping Point analysis said 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, nearly three times the national median of just over two years, as reported by Zillow Inc., Seattle (which owns StreetEasy).

The report found 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 by 18 months, while the Bronx rose by 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. StreetEasy said Staten Island was excluded from the report because of insufficient data.

“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,” said StreetEasy Senior Economist Grant Long.

Manhattan had the longest median tipping point at 7.7 years in the first quarter, 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. increases were even more drastic in the more expensive areas.

Within each borough, StreetEasy reported strong differences between neighborhoods. In Brooklyn, a prospective homeowner might find tipping points as long as 30 years in a neighborhood such as Boerum Hill, meaning homeowners would end up paying their 30-year fixed-rate mortgage before reaching their tipping point. Conversely, neighborhoods such as Fort Greene, downtown Brooklyn and Brooklyn Heights all have tipping points under five years.