When it comes to Manhattan, renting, not buying, in borough is still the wise way to go
BY Phyllis Furman
DAILY NEWS BUSINESS WRITER
Thursday, April 28th 2011, 4:00 AMSunshine, Steven
In Manhattan, the list price of a two-bedroom home was $1.6 million, up 2%, and the annualized rent for the same sized home was $41,000, down 8%.
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Think it’s time to finally stop writing checks to your landlord and buy a home instead?
If you live in Manhattan, think again.
Even with sales prices down from the peak, renting, not buying, in the borough is still the wise way to go, according to a study to be released today by real estate firm Trulia.
Not only did the borough top the list of U.S. markets where it’s cheaper to rent than to buy, its rent vs. buy index – a measure of which is more affordable – jumped 27% in the spring compared with the winter.
“The quarter over quarter change was significant,” said Heather Fernandez, vice president of marketing for Trulia.
The story was far different in other major U.S. cities. In eight out of 10, buying was more affordable than renting as rents rose, home prices fell and mortgage rates remained low.
To arrive at a price-to-rent ratio, Trulia looks at the median list price of two-bedroom homes in condos and townhouses, but excludes co-ops and single family homes.
It divides the median list price by the annualized rent of a comparable property to arrive at the index. If the number is 21 or above, it is wiser to rent.
In Manhattan – where the list price of a two-bedroom home was $1.6 million, up 2%, and the annualized rent for the same sized home was $41,000, down 8% – the index was 39.
Manhattan rents are rising and landlord concessions are vanishing, according to data compiled by Citi Habitats. At the same time, sales prices have been stagnant.
As a result, if you are in a position to buy, now may be just the right time, he said. If the economy improves and sales prices climb, renters could be missing out on an opportunity.
“Lots of my rental clients are becoming sales clients,” Malin said.