Queens residents who plan to live in the borough for more than three years should probably purchase a home rather than rent, a report by StreetEasy advises.
The real estate listings site released a report Monday, titled StreetEasy Tipping Point, which found that buying a home is financially more advantageous in Queens after three years, which is the shortest period of all five boroughs.
The report, which factored in 300 neighborhoods, calculates the number of years it would take for the costs of owning a home to equal the costs of renting a comparable home in the same area.
When comparing the two choices, the report states the benefit of owning a home allows owners to invest in an appreciating asset. Renting a home allows people to direct their savings toward other uses.
The average tipping point in New York City is 4.9 years, making the “World’s Borough” above average in terms of the cost-benefit analysis. Residents of Howard Beach, Briarwood and Alley Park have the shortest tipping points with 1.4 years, 1.5 years and 1.1 years respectively.
Neighborhoods with the longest tipping points include Douglaston with 6.5 years, Long Island City with 6.1 years and Fresh Meadows with 5.8 years.
Alan Lightfeldt, StreetEasy Data Scientist, contributes this shorter tipping point to the lower sales prices and higher down payment in the Queens real estate market.
“Relatively low sales prices combined with the fact that the typical Queens buyer puts down a 26.7 percent down payment, means the rent vs. buy decision tips in the favor of buying in a much shorter time period than other boroughs,” Lightfeldt said. “In an area like Manhattan, the cost of homes is prohibitively high in many neighborhoods, contributing to a higher tipping point.”
He also added that there is less variation in tipping points between Queens neighborhoods because prices around the borough are relatively similar. The median resale price exceeds $1 million in only one neighborhood – Douglaston. Resale prices in Manhattan and Brooklyn vary widely by comparison.
According to a study by the Real Estate Board of New York (REBNY), Queens residents in 2015 have been buying more. Home sales in Queens increased by 6 percent to 4,098 total sales. The average sales price of a Queens home was $499,000, an 8 percent increase from the previous year.
StreetEasy broke down the costs and benefits of renting versus buying a home in this chart:
The real estate listing site also broke down the average price of a home and tipping point in each Queens neighborhood in an interactive map.