Whether you should buy or rent in NYC depends upon how much money you have, what building you are buying into, and how long you plan to own the property.
StreetEasy developed a “tipping point” metric that approximates the number of years it would take for the costs of owning a home to equal the costs of renting a comparable one in the same area. Their findings suggest that it makes financial sense to own a home in NYC instead of renting if a person stays longer than 4.9 to 7.4 years.
Additionally, David Weidner, managing editor for Trulia’s housing economics research team, stated that in every major U.S. market, it’s cheaper to buy a home than it is to rent over a period of 7 years.
Another rule of thumb, according to Thrillist, is that if you have been in NY for ten years, are in your early-to-mid 30s, and are looking to spend $3,000 – $5,000 in rent per month then is would make sense to buy.
The benefit to buying a property is that you are investing in an appreciating asset (usually) and there are tax deductions. The benefit to renting is that you can free your money for other potentially higher-yielding investments.
According to the latest market report from Douglas Elliman, over the last 10 years the median sales price in NYC rose 27.9% for apartments and 58.3% for townhouses.
The appreciation in values of apartments in NYC can vary substantially however so it is essential to review the sales history in the building where you would like to purchase.
If you are buying in a new development with no sales history, it is important to study comparable sales in similar buildings in the area. Traditionally, apartments in new developments appreciate quicker in value than resales and if you buy in a desirable or upcoming neighborhood with a reputable developer, there is an opportunity to make a lot of money.
Take for example Related Companies, one of NYC’s top residential developers, the apartments in their new developments consistently prove to be valuable investments.
One of Related’s most successful residential developments includes 25 and 80 Columbus Circle designed by Skidmore, Owings & Merrill. Completed in 2004, many apartments in the building have increased in value 10% and above annually.
80 Columbus Circle
Unit 69A, a 1,653 sq. ft. 2-bedroom and 2 1/2 -bath apartment:
<>Sold 02/27/2004 for $3,920,262
<>Sold 04/28/2010 for $6,275,000 (a $2,354,738 increase (60%) in approx. 6 yrs. or approx. 10% per yr.)
<>Sold 10/24/2016 for $8,975,000 (a $2,700,000 increase (43%) in approx. 6.5 yrs. or approx. 7% per yr.)
Unit 66B, a 1,874 sq. ft. 2-bedroom and 2 1/2 -bath apartment:
<>Sold 04/27/2004 for $4,185,007
<>Sold 06/18/2013 for $8,850,000 (a $4,664,993 increase (111%) in approx. 9 yrs. or approx. 12% per yr.)
<>Sold 05/18/2016 for $11,000,000 (a $2,150,000 increase (24%) in approx. 3 yrs. or approx. 8% per yr.)
Related’s development, Superior Ink, at 400 West 12th Street in the West Village was completed in 2009. Since that time, many apartments in the building are increasing in value at the rate of 5% and above annually.
400 West 12th Street – Superior Ink
Unit 3F, a 1,608 sq. ft. 1-bedroom and 2-bath apartment:
<>Sold 06/25/2010 for $2,522,812
<>Sold 01/29/2015 for $3,600,000 (a $1,077,188 increase (43%) in approx. 8 yrs. or approx. 5% per yr.)
Unit 10A, a 1,441 sq. ft. 2-bedroom and 2-bath apartment:
<>Sold 10/16/2009 for $3,462,050
<>Sold 01/04/2017 for $4,500,000 (a $1,037,950 increase (30%) in approx. 4.5 yrs. or approx. 7% per yr.)
Zekendorf Development’s 15 Central Park West is one of the most successful residential developments in Manhattan. Completed in 2007, many apartments in the building have increased in value 15% and above annually.
15 Central Park West
Unit 26A, a 3,097 sq. ft. 3-bedroom and 3 1/2 -bath apartment:
<>Sold 04/25/2008 for $12,219,000
<>Sold 01/24/2017 for $27,500,000 (a $15,281,000 increase (125%) in approx. 8.5 yrs. or approx. 15% per yr.)
Unit 30B, a 2,367 sq. ft. 2-bedroom and 2 1/2 -bath apartment:
<>Sold 06/11/2008 for $5,905,850
<>Sold 01/12/2017 for $17,650,000 (a $11,744,150 increase (198%) in approx. 8.5 yrs. or approx. 17% per year)
Extell Development Company is another top residential developer in Manhattan. They have a portfolio that exceeds 20 million square feet and consistently produce quality product.
Extell’s development at 535 West End Avenue on the Upper West Side was completed in 2008. Many apartments in the building have increased in value 7% and above annually.
535 West End Avenue
Unit 6A, a 4,396 sq. ft. 6-bedroom and 5 1/2 -bath apartment:
<>Sold 09/08/2010 for $8,637,300
<>Sold 08/08/2014 for $10,950,000 (a $2,312,700 increase (27%) in approx. 4 yrs. or approx. 7% per yr.)
Unit 7A, a 4,396 sq. ft. 6-bedroom and 5 1/2 -bath apartment:
<>Sold 12/14/2010 for $8,700,000
<>Sold 07/23/2015 for $12,150,000 (a $3,450,000 increase (40%) in approx. 4.5 yrs. or approx. 9% per yr.)
Looking to purchase an apartment in NYC? Contact Dickse Fitzgerald