To rent or to buy? It’s a question that most of us will eventually face, particularly city dwellers.
If you’re a New York City resident, where the median sales price for homes is $1.2 million, the answer may may be simpler than you thought.
“If you’ll only be in town a year, renting will almost always be your obvious best choice … You probably don’t want to spend the time and money necessary to buy a house: think down payment, closing costs, loan charges, appraisal fees and so on.”
Of course, everyone’s situation is unique, and there is no clear answer to the age-old “to rent or buy” question.
However, to help you decide, SmartAsset calculated the breakeven point — the point at which the total costs of renting become greater than the total costs of buying — for 29 major cities.
For New York City, the typical household would have to stay put for 18.3 years to make buying a home worth their money.
To calculate the breakeven points, SmartAsset compared the total costs of buying and renting for a household earning $100,000 a year, drawing data from the US Department of Housing and Urban Development and the US Census Bureau 2012 American Community Survey. For the buying scenario, the research team assumed a mortgage rate of 4.5%, closing costs of $2,000, and a down payment of 20%.
Thanks to New York City’s competitive housing market — which means higher prices, fees, and closing costs — you may want to stick to renting unless you plan on being in the Big Apple for the long haul.
NOW WATCH: Money & Markets videos
Business Insider Emails & Alerts
Site highlights each day to your inbox.