If you are already spending a substantial portion of your paycheck on rent, you might be surprised to learn that you can afford to buy a home in New York City. The median tipping point for buying in New York City is less than 6 years, which means that for most people who plan to stay in their home for at least 6 years, buying makes more sense than renting. This tipping point varies widely from neighborhood to neighborhood, with Bay Ridge’s tipping point under three years and the Lower East Side’s tipping point at 30 years. Nevertheless, the length of time you plan to stay in your New York City home is a huge factor in determining whether renting or buying is the right financial move for you.
An estimated ⅓ of Manhattan rental listings saw a price reduction last quarter, suggesting it is a relatively good time to rent in NYC, and research shows that renters can make more money than buyers by putting their savings into stocks rather than waiting for their equity to build. Yet while this might be true for most of the United States, the New York City sales market is unique in that median home sales prices increased over 30% from 2005 to 2015 alone, and the current combination of negotiating power (because of lower prices in various submarkets), and rising mortgage interest rates, makes it worthwhile (and fun) to do the math.
You can determine whether it makes sense for you to buy or rent using Streeteasy’s tipping point tool or The New York Times’ rent vs. buy tool. If you determine that now is a good time to buy, I would be happy to show you homes in the best current neighborhoods for investing, and I can connect you with trusted financial advisors and mortgage professionals who will review your financial statements to give you a clear sense of what you can afford.