If you’ve been trying to decide between renting and buying in the Big Apple, data continues to show that renting is the best option. Recent reports have suggested that New York bucks the national trend of renting vs. buying, where in most US cities buying is the preferred choice.
Buying Generally Favored Elsewhere
The upheaval in the housing market over the past few years has certainly changed the landscape of the rental market in many US cities. In nearly 75 percent of the biggest cities in the nation, it has become less expensive to buy a home compared to renting one. This is due to a marked increase in the number of foreclosures nationwide, which has in turn boosted demand for apartments and other rental units.
However, New York is one of the few big cities where the opposite is true. Former homeowners in New York City have bombarded the rental market, significantly increasing demand. This has resulted in the steady increase of rental prices, making it slightly more expensive to rent rather than buy in places like Manhattan.
Other large US cities are in the same boat as New York City. Boston and Cleveland are both places where renting remains generally affordable, although buying may be a better long-term financial decision. Cities where buying is the most affordable include Arlington and Phoenix, based on the cost of a two-bedroom home in the 50 largest cities in the United States.
Renting Vs. Buying in New York
Data suggests that in New York City, buying a home is about 26 percent less expensive than renting. This figure has remained relatively unchanged over the past year, although is closer than in many other US cities. For example, buying in Detroit is 70 percent less expensive than renting.
However, although that number may suggest buying is the best option, that may not be so in New York City, especially considering a buyer’s unique circumstances. If a homeowner lives in a home for three years and does not itemize any tax deductions, it would be more expensive to buy. But living in the same home for a longer period of time lowers the relative cost of owning because it spreads costs out over a greater span of time. Itemizing deductions could mean deducting mortgage interest and property tax payments.
Over the course of the next year, it is expected that buying will become less affordable across the country. Home prices are expected to continue their rise and low mortgage rates will mean that many more people will delve into the housing market and buy as opposed to rent.