Buy-to-Rent Ratio for New York City Almost Double National Average
The Times provides all the numbers from Moody’s Analytics here…
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thwackamole, you illustrate the point I was trying to make above about neighborhoods like Brooklyn Heights.
You can continue renting happily – in an apartment. Good luck trying to rent a house like 56 Middagh. Right now you have two choices, and the lower of the two starts at $11K a month. If you want to live in a house, the fact that the buy-to-rent ratio is 2x the average is largely irrelvant.
Right now, in the Brooklyn Heights, there are several comparable buildings for sale. The one that is 10-family rental was priced at roughly 15-17, which I thought was rich. On the next block, a similarly sized three-family property was priced at well north of 27.
Then you’ve got ridiculous things like 56 middagh st where if you could get $2700 per floor (you can’t) and $300 per parking spot, you’d get a ratio like 27.5, and even if you took 1.5M off of it you’d get to a ratio of 16, which is hardly a buy in my mind (note that at higher prices, less of the mortgage is deductible).
However, in upstate new york, you can buy a house for $75,000 that would rent for $750/month, which is a screaming buy as long as you think that your tenants will continue to pay.
So I’m happily renting and will continue to do so until the prices become more reasonable.
How would you know???
quote:
people in the market for “trophy properrties” really don’t care what the prop taxes are
wrong
*rob*
I think this only works in NYC on a per-building basis. I use it as a guideline, but not a rule. Plus, many times you can’t find a comp that makes it worthwhile.
Maybe I’m misunderstanding. The list says “Manhattan” is 26.7 and “New York” is 15.4. I’ll assume that “New York” includes Manhattan. So can’t we assume that Brooklyn is somewhere between 26.7 and 15.4? Maybe closer to 26.7 in some of the more blue chip hoods (BH, CH, CG etc) and less in others.
thwack, NYC finances are actually in quite good shape. Changing the laws on how RE taxes rise is neither necessary nor likely here.
Additionally, people in the market for “trophy properrties” really don’t care what the prop taxes are. In the overall picture, they are insignificant to them.
Agree that it totally depends on the property in question. Rental rates used to calculate these things include rent stab and rent control apartments, which skews the rent rates, as do the super-high-end luxury apartments that sell for huge bucks and bring up the average.
This is what I’ve been saying for 5+ years.
I’ve had multiple conversations with brokers about how if I bought a house and rented it out, even at astronomical rents, I’d only cover 2/3rds of the mortgage.
There’s a bubble in trophy properties, and I think it will end when NYC seriously jacks up property taxes.