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How Long Should You Keep Renting That Apartment?
By
Jaya Saxena
Published Apr 21, 2010
Modified Apr 21, 2010
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By
Jaya Saxena
Published Apr 21, 2010
Modified Apr 21, 2010
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It's the eternal question for real estate obsessed New Yorkers: should you rent or buy? Now, we might finally have an answer. The New York Times created this awesome, interactive graph that calculates common expenses of buying and renting, spitting out precisely at what year you would be better off buying your apartment. For instance, if you're paying $5,000 in rent, and your place costs $1 million, you should think about buying after 11 years. But if you're only paying $700 a month for a place that costs $175,000, you'll pretty much never be better off buying.
Those stats are just for the basic calculator. The graphic also calculates benefits based on home price appreciation, annual rent increase or decrease, mortgage rates and property taxes, and will calculate how much per year you will save or lose with each option. However, Economist David Leonhardt says that in these troubled times, most New Yorkers are actually better off buying. Home prices are still low enough that it's still a bargain in places like New York and L.A., which Leonhardt calls "microcosms of today’s more nuanced real estate market."
He suggests using a simple formula if you don't happen to be around a computer to use the graph: divide the purchase price of the house by the annual cost of renting it. If the number is above 20, consider renting, but if it's below 20 buying may be a better option. So, will you ever be buying your place, or are you a die-hard (bitter) renter?
Tagged
buying
real estate
rent vs. buy
renting
Jaya Saxena
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