2026 Buy vs Rent Analysis
Using the NYC Real Estate Calculator
1. Introduction
This is my 2026 update of a real-life case study comparing buying with a mortgage and renting in New York City. In the 2025 analysis, buying came out ahead. This year I used the same building with 2026 numbers: today's mortgage rates, current rents and asking prices, the new federal tax rules and the FARE Act. The result changed.
The case: a couple earning $300,000 a year is deciding between buying a one-bedroom condo in Midtown and renting a one-bedroom with the same layout in the same building, 159 West 53rd Street.
To buy: Unit 31D, an 800 square foot one-bedroom, was listed for $970,000 in August 2026, with common charges of $1,092 a month and real estate taxes of $1,360 a month (StreetEasy).
To rent: Unit 28D, the same 800 square foot layout, rented for $5,000 a month in July 2026. Units 35D and 37D rented for $5,000 and $5,200 earlier this year, and 33D is listed now at $5,000 (StreetEasy).
Earlier sales in the same line: 24D sold for $838,000 in April 2024 (the 2025 case study), and 11D sold for $910,000 in July 2025.
The short answer: at a 7.25% mortgage rate, renting comes out ahead for this apartment over both 5 and 10 years. Buying pulls ahead only after year 13. If rates fall to 6.25%, or prices grow 4% a year, buying wins again over 10 years. The details are in chapter 8.
This year I used my own NYC Real Estate Calculator instead of the NY Times calculator. It follows the same method, includes every NYC closing cost and transfer tax, and is free to use, so you can check every number below or run your own.
2. The Basics
2.1 Home Price
How does this affect you if you buy?
The price sets your down payment, your closing costs and the size of your mortgage. If you keep renting instead, I assume you invest the same amount you would have spent on the down payment and closing costs, so that money becomes part of your opportunity cost. The size of the mortgage also sets how much interest you can deduct.
Our Case: $970,000, the asking price of unit 31D. In the 2025 analysis I used an $838,000 sale. A buyer may negotiate below asking; I test a $940,000 price in chapter 8.
2.2 Monthly Rent
How does this affect you if you rent?
Rent is your main cost of renting. It also sets your security deposit, which is one month's rent in NYC and could otherwise be invested.
Our Case: $5,000, the July 2026 rent for unit 28D, the same layout. The same unit rented for $4,500 in October 2024.
2.3 How Long Do You Plan to Stay?
How does this affect you if you buy?
It sets how long you pay the mortgage, common charges, taxes and insurance, and how long your down payment and closing costs stay tied up in the home. It also spreads the one-time costs of buying and selling over more years.
How does this affect you if you rent?
It sets the total rent you pay and how long your security deposit is tied up.
General Rule: Buying becomes more appealing the longer you stay, because the upfront costs are spread over more years.
Our Case: Case 1 assumes you stay 10 years and then sell. Case 2 assumes you stay 5 years.
3. Mortgage Details
I assume a fixed-rate mortgage. An adjustable-rate mortgage starts with a lower rate but adds uncertainty, since the rate can change after the fixed period.
3.1 Interest Rate
How does this affect you if you buy?
The rate sets how much interest you pay, the largest cost of buying with a mortgage. Part of the interest is deductible, which offsets some of it (see chapter 5).
Our Case: 7.25%. Freddie Mac's 30-year average was 7.28% on October 1, 2026, up from 6.34% a year earlier. In 2025 I used 6.50%. This is the single biggest reason the result changed.
3.2 Down Payment
How does this affect you if you buy?
The down payment is money you could otherwise invest, so it drives your opportunity cost. A larger down payment means a smaller loan and less interest.
Our Case: $194,000, 20% of the purchase price.
3.3 Length of Mortgage
How does this affect you if you buy?
A shorter mortgage means higher monthly payments but much less interest over time.
Our Case: 30 years. Principal and interest come to $5,294 a month.
3.4 Private Mortgage Insurance (PMI)
Lenders usually require private mortgage insurance when you put down less than 20%. It is paid monthly until you reach at least 20% equity, and the rate depends on your credit score and down payment.
How does this affect you if you buy?
PMI adds to your monthly cost of buying until it comes off.
Our Case: $0, since we assume a 20% down payment.
4. Financial Forecasts
4.1 Home Price Growth Rate
How does this affect you if you buy?
Price growth sets your profit when you sell. Higher growth lowers your net cost of buying.
If you sell at a profit, capital gains tax may apply. Married couples filing jointly can exclude up to $500,000 of profit ($250,000 for single filers) if the home was their main residence and they owned and lived in it for at least two of the five years before the sale.
Our Case: 3% a year. The 2025 analysis used 6%, based on the long-term growth of Manhattan condo prices per square foot. A higher growth rate favors buying, so 6% was generous to the buyer. For 2026 I used 3% as the base case and test 2% and 4% in chapter 8.
4.2 Rent Growth Rate
How does this affect you if you rent?
Rent growth sets how much your rent rises over the years you stay.
General Rule: The faster rents grow, the more appealing buying becomes.
Our Case: 3.5% a year. The same layout went from $4,500 in October 2024 to $5,000 in July 2026, roughly 6% a year, but I used a lower long-term rate. The 2025 analysis used 4.9%.
4.3 Investment Return Rate
How does this affect you if you buy?
Money spent on the down payment and closing costs cannot earn a return elsewhere.
How does this affect you if you rent?
The renter invests the money the buyer would have spent upfront, plus any monthly savings, and earns a return on it.
General Rule: Higher investment returns make renting more appealing, since buying requires a larger upfront outlay.
Our Case: 5% a year after taxes, a reasonable figure for a balanced portfolio. The 2025 analysis used 10%. I test 7% in chapter 8.
4.4 Inflation Rate
How does this affect you if you buy?
Inflation raises recurring costs of owning: common charges, property taxes, insurance and repairs.
Our Case: Carrying costs rise 3% a year. Annual inflation was 3.4% in August 2026, but over long periods it has averaged closer to 2.5% to 3%.
5. Taxes
Mortgage interest and property taxes are deductible if you itemize. The higher your tax bracket, the larger the benefit. If your deductions are smaller than the standard deduction, owning gives you no extra tax benefit.
The 2025 analysis assumed the 2017 tax cuts would be extended. They now have been: the One Big Beautiful Bill Act, signed in July 2025, made them permanent and raised the cap on state and local tax (SALT) deductions.
5.1 How You File Your Taxes
If you are married and filing jointly (2026):
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Standard deduction: $32,200
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Mortgage interest is deductible on up to $750,000 of loan
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SALT deduction cap: $40,400, which covers property taxes plus state and city income taxes. The cap phases down toward $10,000 for household income above approximately $505,000
If you are single: the standard deduction is $16,100, and the mortgage limit and SALT cap rules are the same, except that married couples filing separately each get half.
General Rule: Married couples filing jointly with a large mortgage benefit most.
Our Case: A married couple filing jointly.
5.2 Property Tax
In NYC, a condo's property tax depends on the building's assessed value and is billed to each unit. Owners who use the home as their main residence may qualify for the STAR credit, which lowers the school tax portion.
How does this affect you if you buy?
Property taxes add to your monthly cost of owning but are deductible within the SALT cap.
Our Case: $1,360 a month, from the listing for unit 31D. I did not include a STAR credit, which keeps the estimate conservative for the buyer.
5.3 Marginal Tax Rate
How does this affect you if you buy?
The higher your bracket, the more each dollar of mortgage interest and property tax saves you.
Our Case: A couple earning $300,000 is in the 24% federal bracket in 2026 (taxable income of $211,401 to $403,550 for joint filers). Their NY State and City income tax is approximately $28,000 a year. With the higher SALT cap, owning saves them approximately $14,961 in federal tax in the first year.
5.4 Why the Tax Change Matters
Under the old $10,000 SALT cap, NYC homeowners lost most of their property tax deduction. The new $40,400 cap restores much of it for households under approximately $505,000 of income, which makes buying more attractive than it was in 2025. Even so, the higher mortgage rate outweighs this benefit in our case.
6. Closing Costs
You pay one-time costs when you buy and when you sell.
How do these costs affect you if you buy?
Closing costs are money you cannot get back or invest, so they raise the cost of buying, especially if you stay only a few years.
6.1 Cost of Buying a Home
Typical buyer closing costs in NYC when financing:
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Condos: approximately 3% to 5% of the price, including the mortgage recording tax (1.925% of loans of $500,000 or more) and title insurance
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Co-ops: approximately 1% to 2%, since there is no mortgage recording tax or title insurance
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New development: more, since the buyer usually pays the sponsor's transfer taxes
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Mansion tax of 1% or more applies to purchases of $1 million or more
Our Case: $32,133, or 3.3% of the price. There is no mansion tax because the price is under $1 million. Your own estimate: Buyer Closing Costs tab.
6.2 Cost of Selling a Home
Typical seller costs in NYC:
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Brokerage commission
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NYC transfer tax of 1% to 1.425%, plus NYS transfer tax of 0.4% (0.65% for residential sales of $3 million or more)
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Co-op flip tax, if the building has one
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Attorney and building fees
Our Case: A 5% commission plus transfer taxes, attorney, building and prep costs: $87,247 after 5 years and $99,471 after 10 years, approximately 7.6% to 7.8% of the sale price.
7. Maintenance and Fees
How do these costs affect you if you buy?
Every recurring cost of owning adds to the cost of buying. The lower these costs, the better the case for buying.
7.1 Repairs and Renovation
Upkeep inside the apartment: appliances, fixtures, painting and repairs.
Our Case: 0.25% of the home's value a year, approximately $2,400 in the first year. The building's common charges cover the structure and shared systems.
7.2 Homeowner's Insurance
A condo policy covers your contents, the interior of the unit and personal liability.
Our Case: $60 a month ($720 a year). The 2025 analysis used $1,257 a year and noted the real cost would likely be closer to $750.
7.3 Extra Monthly Utilities
Most Manhattan condos include heat and hot water in the common charges, and most Manhattan rentals include them in the rent.
Our Case: $0 for both, since electricity is paid separately in either case.
7.4 Common Charges
Condo common charges cover building staff, insurance, maintenance, management and shared utilities. They do not include property taxes and are not tax deductible. Co-op maintenance includes the building's property taxes and mortgage interest, and the share attributed to you is deductible.
Our Case: $1,092 a month, from the listing for unit 31D, rising 3% a year.
7.5 Security Deposit
How does this affect you if you rent?
The deposit is tied up for the length of the lease and returned at the end. It cannot be invested in the meantime.
Our Case: One month's rent, $5,000.
7.6 Broker's Fee
The FARE Act (Local Law 119 of 2024) took effect on June 11, 2025. Landlords who hire a broker now pay that broker's fee; tenants pay only if they hire their own broker.
How does this affect you if you rent?
A broker fee is an upfront cost that cannot be invested. Removing it lowers the cost of renting.
Our Case: $0. The 2025 analysis assumed 15% of a year's rent.
7.7 Renter's Insurance
Renter's insurance is not required but every renter should have it.
Our Case: $15 a month ($180 a year).
8. Results
Both households start with the same cash. The buyer spends $226,133 on the down payment and closing costs; the renter invests it. Each month, whoever pays less invests the difference. At the end, the buyer sells, pays the selling costs and the loan balance, and the two net worths are compared.
Monthly cost to own today: $7,806 ($5,294 principal and interest, $1,092 common charges, $1,360 taxes and $60 insurance), before tax savings. Monthly rent today: $5,000.
8.1 Case 1: 10 Years
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Net worth if you buy: $534,360 (home value $1,303,599, less $99,471 of selling costs and the $669,768 loan balance)
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Net worth if you rent and invest: $577,556
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Renting comes out ahead by approximately $43,000
8.2 Case 2: 5 Years
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Net worth if you buy: $304,870 (home value $1,124,496, less $87,247 of selling costs and the $732,379 loan balance)
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Net worth if you rent and invest: $394,595
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Renting comes out ahead by approximately $90,000
8.3 When Buying Pulls Ahead
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Buying comes out ahead from year 13 onward
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Over 10 years, buying wins if the same apartment rents for more than $5,241 a month. Over 5 years, the rent would need to be above $6,233
8.4 What Would Make Buying Win
Each line changes one assumption and shows the 10-year result:
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Mortgage rate of 6.25%: buying comes out ahead by approximately $29,000 and pulls ahead in year 9
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Home price growth of 4% a year: buying comes out ahead by approximately $78,000 and pulls ahead in year 7
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Home price growth of 2% a year: renting comes out ahead by approximately $155,000
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Buying at $940,000, 3% below asking: renting still comes out ahead, by approximately $23,000
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Investments earning 7% a year: renting comes out ahead by approximately $143,000
8.5 Conclusion
In 2026, at today's rates, renting this apartment beats buying it unless you plan to stay more than 12 years. The main reasons are the higher mortgage rate, a higher price for the same layout, and more realistic growth assumptions than in 2025. The higher SALT cap and the end of tenant broker fees partly offset each other.
Buying still makes sense if you plan to stay long term, if you can secure a lower rate, or if you buy below asking in a building where prices are rising. The comparison also leaves out what favors owning: a mortgage builds equity every month whether or not you invest your savings, an owner can refinance if rates fall, and an owner controls the home and cannot be asked to leave at lease renewal.
9. What Changed From the 2025 Analysis
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Mortgage rate: 7.25%, up from 6.50%
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Price and rent: $970,000 and $5,000, up from $838,000 and $4,500
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Income: $300,000, up from $200,000. At today's price and rate, the monthly cost to own is 47% of a $200,000 income, above what lenders allow, and 31% of $300,000
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Growth assumptions: 3% price growth and 3.5% rent growth, down from 6% and 4.9%. The 2025 rates favored buying
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Investment return: 5% after taxes, down from 10%. A lower return favors buying
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Taxes: the 2017 tax cuts are now permanent; the 2026 standard deduction is $32,200 and the SALT cap is $40,400
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Property tax: $1,360 a month from the 31D listing. The 2025 analysis listed $1,155 for unit 24D
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Broker fee: $0 under the FARE Act, down from 15% of a year's rent
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Calculator: my NYC Real Estate Calculator instead of the NY Times calculator, so every NYC tax is included and anyone can check the numbers
10. Definitions
10.1 Buying
Initial costs: the down payment and closing costs you pay at the closing.
Recurring costs: mortgage payments, common charges, property taxes, insurance and upkeep, less the federal tax savings from deducting mortgage interest and property taxes above the standard deduction.
Opportunity cost: what the money spent on buying would have earned if invested instead.
Net proceeds: the sale price less selling costs and the remaining loan balance.
10.2 Renting
Initial costs: the security deposit and, if you hire your own broker, the broker's fee.
Recurring costs: rent and renter's insurance.
Opportunity cost: what the security deposit would have earned if invested.
Net proceeds: the security deposit returned at the end of the lease.
Sources
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Sales, rentals, common charges and taxes for 159 West 53rd Street: StreetEasy building and unit pages, October 2026
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Mortgage rates: Freddie Mac Primary Mortgage Market Survey, October 1, 2026
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Inflation: U.S. Bureau of Labor Statistics, CPI for August 2026
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2026 tax brackets, standard deduction and SALT cap: IRS guidance under the One Big Beautiful Bill Act
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Mansion tax, mortgage recording tax and transfer taxes: NYS Department of Taxation and Finance and NYC Department of Finance
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Broker fees: NYC Department of Consumer and Worker Protection, FARE Act (Local Law 119 of 2024)
This analysis is for general information and planning. It is not tax, legal or financial advice. Review your own situation with a CPA, attorney and lender.
