Real estate research shows that purchasing Manhattan apartments is more expensive than renting one, yet, can this overprice mean that buying a pad in New York doesn't pay off at all?
According to StreetEasy, a Manhattan median homebuyer would need to own a property for 7.4 years first before he can say that owning an apartment is cheaper than just renting it. But, how can pricing really be determined?
Comparing the annual cost of renting and buying by considering factors like tax deductions, asset appreciation, and inflation can help one determine whether the cost of buying a home or renting it increases, according to The Real Deal. Over the course of time, these cost factors decrease, translating to the fact that owning becomes cheaper than renting.
On the flip side, the greater the years of stay in a property, the pricier it would be in the market compared to rentals. This is probably the reason that developers in Manhattan are up for building condo towers or converting rental properties into residential condos as there is a greater premium for for-sale apartments compared to rentals over time.
TRD reveals that the number of years for buying a property to be way cheaper than renting varies according to boroughs. For example, in Tribeca, one needs to spend 31 years while it's only 1.2 years in West Harlem. Apartment owners in Brooklyn will have to wait for 4.4 years while homebuyers in Boerum Hills should wait 16.4 years until owning becomes less expensive than renting.
Meanwhile, the figures above should not scare interested homebuyers nor should it hold them back from getting a pad in NYC despite the trending fact that this famous city really does command expensive lifestyle.
"To own property in NYC, you have to be financially responsible. And when I say responsible, it's more than just having the money in the bank," Jarrod Randolph, founder of JGR Property Group, said via Business Insider.