Amid rising rents, buying a Manhattan apartment hasn’t looked this sensible since 2006. Citing data from appraisal firm Miller Samuel, Bloomberg News reported that in the first quarter the average cost of buying was 20.8 times more expensive than the annual cost of renting, the smallest spread since the end of 2006, when buying was 20.4 times the cost of renting. In the second quarter of 2008, the multiple was 26.7.
Miller Samuel said the median price of buying a Manhattan condo or co-op in the first quarter fell 0.9 percent year-over-year to $775,000, whereas the median monthly rent jumped 7.1 percent to $3,100. The analysis factors in real estate taxes and maintenance charges, but doesn’t account for mortgage interest tax deductions that would reduce the burden.
But thanks to a tight lending climate, the news is meaningless for many interested buyers, Bloomberg News noted. Further, although it’s a relatively good time to buy in Manhattan, the math does not make a purchase on the island “a good deal” compared to other metropolitan areas, according to Jed Kolko, chief economist of Trulia.
In its May issue, The Real Deal broke down the costs of owning versus renting in Manhattan, and found that most neighborhoods were more affordable for renters. [Bloomberg]