Best Neighborhoods to Buy, Not Rent
If all your friends moving to the suburbs and second cities is any indication of the difficulty of buying in New York City, then it’s no surprise that we all assume we’ll be renters forever. For most of us, making the rent is hard enough, so the prospect of buying in this city is inconceivable. How on earth is buying ever going to be an option?
Disheartening as that may seem, it is just as disheartening to toss away thousands of dollars every month on an apartment that will never be yours. That’s why StreetEasy devised the “tipping point,” a metric that approximates the number of years it would take for the cost of owning a home to equal the cost of renting a comparable one in the same area. The length of the tipping point depends a great deal on where you live.
In Manhattan, the tipping point is 9.2 years, meaning that it will take you 9.2 years for the cost of homeownership to yield a better return than renting. Things are different in Brooklyn where the tipping point is much shorter at 3.6 years. Within each of the boroughs, however, things vary dramatically. The tipping point for Downtown Manhattan is an almost unfathomable 19 years. When you head further north, however, the tipping point drops. Inwood, for example, has a tipping point of only 1.6 years, the lowest tipping point in Manhattan.
For this post, we’ve hand-selected the best Brooklyn and Manhattan neighborhoods for buying this quarter with relatively low tipping points. And our choices are not in far-flung places, but in traditionally highly desirable neighborhoods. Take a look:
Best Neighborhoods for Buyers in Brooklyn
| Neighborhood | Tipping Point | Median Asking Rent | Median Sales Price | Price Per Square Foot |
| Fort Greene | 2.6 years | $2,995 | $682,720 | $1,142 |
| Sunset Park | 2.8 years | $2,000 | $487,500 | $685 |
| Kensington | 3.2 years | $2,100 | $515,000 | $497 |
| Downtown Brooklyn | 3.4 years | $3,071 | $749,180 | $1,128 |
| Windsor Terrace | 3.5 years | $2,497 | $840,000 | $792 |
| Gowanus | 3.5 years | $2,999 | $917,500 | $1,075 |
| Prospect Heights | 3.6 years | $2,900 | $735,000 | $1,054 |
- Tipping Point: 2.6 years
- Median Asking Rent: $2,995
- Median Sales Price: $682,720
- PPSF: $1,142
Known its impressive brownstones, carefully curated shops and literati vibe, Fort Greene is not typically considered a bargain-friendly neighborhood, but here we have evidence that disproves that assumption. With a tipping point of just over 2.5 years, Fort Greene proves to be a great neighborhood for buyers — especially when compared to renting.
- Tipping Point: 2.8 years
- Median Asking Rent: $2,000
- Median Sales Price: $487,500
- Median Asking PPSF: $685
Whether you’re in the market to buy or rent, Sunset Park is a good deal. The median asking rents are below the borough’s median ($2,600/month) by 26 percent. The sales market tells a similar story in which the median sales price is $487.5K, which is 25 percent lower than the borough-wide median sales price of $631K. But when you factor in the long-term value of investing in property, buying in Sunset Park offers a better deal than renting. It will only take you 2.8 years for the cost of buying to outweigh the cost of renting.
(Source: Daniel Portalin via Flickr Creative Commons)
Kensington
- Tipping Point: 3.2 years
- Median Asking Rent: $2,100
- Median Sales Price: $515K
- PPSF: $497
Close to the park and close to the F, Kensington is a great option if you are priced out of Park Slope, Ditmas Park and other neighborhoods near Prospect Park. If you relish the neighborhood’s laid-back feel and single-family home, suburban housing stock, you’d be smart to buy a place. It will take you just over three years for the cost of buying to outweigh the cost of renting.
Downtown Brooklyn
- Tipping Point: 3.4 years
- Median Asking Rent: $3,071
- Median Sales Price: $749,180
- Median Asking PPSF: $1,128
Downtown Brooklyn’s luxury rental market is booming right now, but the neighborhood is actually more advantageous for those who plan to stay put for at least 3.4 years. If you fit that bill, buying is the better option for you.
(Source: Nick K via Flickr Creative Commons)
Windsor Terrace
- Tipping Point: 3.5 years
- Median Asking Rent: $2,497
- Median Sales Price: $840K
- Median Asking PPSF: $792
Walk down Prospect Park West in Windsor Terrace, past its mom and pop pizzerias and bagel shops, and you really get a sense this is the kind of neighborhood where you want to settle down. It’s got a small-town ambiance with sweet little single-family homes and classic prewar apartments, perfect for raising a family. Combine that with its proximity to Prospect Park and its quiet blocks conducive to stickball and hopscotch and you’ll definitely want to stick around for a while. If you plan to reside in Windsor Terrace for 3.5 years – and you probably will! – buying is better than renting.
- Tipping Point: 3.5
- Median Asking Rent: $2,999
- Median Asking Price: $917,500
- Median Asking PPSF: $1,075
Gowanus got a bad rap as a toxic wasteland and the stomping grounds of the mob, but those days are fading fast. On any given weekend night, the neighborhood is abuzz with young people hopping from one hip gastropub to the next. It’s recently seen a surge in rental inventory with a new luxury development now leasing on Bond Street, but those considering buying in the area would be prudent. The tipping point is just shy of 3.5 years.
Prospect Heights
- Tipping Point: 3.6 years
- Median Asking Rent: $2,900
- Median Sales Price: $735,000
- Median Asking PPSF: $1,054
Prospect Heights is a classic Brooklyn neighborhood, chock-a-block with brownstones, artisanal cheese shops, beer joints and lots of stroller parking. People know it’s a great find and are willing to pay higher dollars to live there. The current median asking rent is $2,900/month. If you’re in love with the neighborhood and could see yourself wanting some stroller parking of your own in the near future, buying in Prospect Park would be more advantageous than renting. It takes just over 3.5 years for the cost of buying to beat out the cost of renting.
Here are our hand-picked choices for best neighborhoods in Manhattan with relatively low tipping points:
Best Neighborhoods for Buyers in Manhattan
| Neighborhood | Tipping Point | Median Asking Rent | Median Sales Price | Price Per Square Foot |
| Inwood | 1.6 years | $1,800 | $453K | $544 |
| Morningside Heights | 3.5 years | $3,250 | $717,500 | $763 |
| Central Harlem | 3.8 years | $2,200 | $532,500 | $838 |
| Roosevelt Island | 3.8 years | $3,335 | $1,012,500 | $783 |
| Sutton Place | 4.2 years | $3,196 | $782,500 | $1,458 |
| Murray Hill | 4.9 years | $3,400 | $750,000 | $1,2885 |
| Upper West Side | 5.7 years | $3,200 | $1,175,000 | $1,521 |
Inwood
- Tipping Point: 1.6 years
- Median Asking Rent: $1,800/month
- Median Sales Price: $453K
- Median Asking PPSF: $544
A lot of recent StreetEasy research has proven Inwood to be the saving grace for buyers and renters looking for a deal in Manhattan. If you were still on the fence about the veracity of our findings, our tipping point data should convince you. The tipping point here is 1.6 years, nearly a decade shorter than the borough-wide tipping point of 9.2 years, and substantially shorter than Brooklyn’s 3.6 year tipping point.
- Tipping Point: 3.5 years
- Median Asking Rent: $3,250
- Median Sales Price: $717,500
- Median Asking PPSF: $763
Morningside Heights has a definite college-town feel with 24/7 ramen delis, bohemian coffee shops and of course, the mega-presence of Columbia University. If you thought the neighborhood was best suited for short-term renters and sublettors, you should think again. According to StreetEasy research, Morningside Heights is one of the most advantageous neighborhood for buyers with a tipping point of just 3.5 years.
- Tipping Point: 3.8 years
- Median Asking Rent: $2,200
- Median Sales Price: $532,500
- Median Asking PPSF: $838
Like Inwood, Central Harlem is among the Upper Manhattan neighborhoods that have been cited as attractive areas for renters and buyers in Manhattan. Although it’s slightly more pricey than Inwood to the north, Central Harlem offers a good deal for people looking to stay in the area for at least 3.8 years.
Roosevelt Island
- Tipping Point: 3.8 years
- Median Asking Rent: $3,335
- Median Asking Price: $1,012,500
- Median Asking PPSF: $783
Anyone who has ever visited or lived on Roosevelt Island will tell you it’s an unusual place. Residents are fiercely loyal to this isolated, car-free enclave, and they willingly admit the place has its own rhythm and routine, which may take some getting used to. Given its provincial vibe, people considering moving to Roosevelt Island will probably want to stay for a while in order to properly acclimate to the distinctive environment. The long-tail benefits of Roosevelt Island also apply the decision to rent or buy. If you are planning to stay at least 3.8 years, then buying is more advantageous than renting.
Sutton Place
- Tipping Point: 4.2 years
- Median Asking Rent: $3,196
- Median Asking Price: $782,500
- Median Asking PPSF: $1,458
Sutton Place is a throwback to Manhattan of the 1950s and 60s, when the UES was too mainstream and long before downtown was cool. Here you’ll still find awnings with taxi lights, little old ladies in furs and Ferragamos and co-ops with maid’s quarters. Sutton Place retains its air of luxury, but when it comes to living here,do not rule home ownership out of the question. It will take buyers 4.2 years for the cost of buying to outweigh the cost of renting.
Murray Hill
- Tipping Point: 4.9 years
- Median Asking Rent: $3,400
- Median Sales Price: $750,000
- Median Asking PPSF: $1,288
Earlier this fall StreetEasy ran a profile on Murray Hill and asked the apropos question – Murray Hill, Bro No Mo’? Sure this was in part a tongue and cheek reference to the stereotypical boat shoe and tube sock clad denizen of the neighborhood, but it was also a commentary on Murray Hill’s changing demographic. The article contends that the neighborhood is increasingly becoming a place for young professionals and families and less popular for the just-out-of-college set. If this holds true, young professionals looking to settle in Murray Hill should opt for buying over renting. The tipping point is 4.9 years.
Upper West Side
- Tipping Point: 5.7 years
- Median Asking Rent: $3,200
- Median Sales Price: $1,175,000
- Median Asking PPSF: $1,521
The Upper West Side is one of the city’s most popular and coveted neighborhoods. Young people, families, empty nesters all seek it out, relishing its proximity to parks, food scene, culture and an all-around great neighborhood vibe. It’s easy to get used to the high quality of life the neighborhood offers and residents who come tend to stay. Do to desirability and apartments costs, the tipping point on the Upper West is 5.7 years.
How We Did It
The tipping point is the product of a cost-benefit analysis between two options: homeownership and renting. To calculate the homeowner’s side, starting with recorded sales prices and asking prices for properties in the city, we account for the costs of purchasing, owning and selling each home. We also calculate the costs of the 30-year fixed rate mortgage, its mortgage interest tax deductions and the tax implications of selling the home. We factor in the New York City mortgage tax and the mansion tax, when applicable (sales priced above $1 million are subject to the city’s mansion tax). Then we use the median down payment percent for the area and the likely home price appreciation using the StreetEasy Price Forecast of the appropriate borough. This allows us to calculate the homeowner’s expected return for each property.
Next, we calculate the renter’s side for the same property. First, we determine the likely asking rent of the property, given the area and number of bedrooms, using StreetEasy’s rental listings of comparable properties. We use the StreetEasy Rent Forecast of the appropriate borough to adjust for rent inflation. We include a broker’s fee adjusted for the likelihood of paying a fee. We assume a rental insurance rate of 1.32 percent and a deposit of one month’s rent. We also assume that the down payment would earn an annual return of five percent, and adjust for taxes.
More about the tipping point methodology here.
Related:
- Best Bargain Neighborhoods
- 10 Best Brooklyn Neighborhoods on a Budget
- Best Neighborhoods for First Time Buyers
