This is pretty misleading on at least two points:
- They front-load the sales charge to make the first few years look awful, when in fact sales charges are typically encountered when trading up and thus can be amortized
- The default values when you enter the graphic show rents rising faster than appreciation, which is completely unrealistic in all but the most recent data set
I'm curious what you put in for the values for this 15 year break even; was it by any chance your very-low-and-rent-controlled apartment? :) I look back at the apartments I rented over the years in Manhattan and shake my head: if I had bought any of them at the time, I'd be rich today.
I plugged in the example I sent earlier: $2300/mo vs $575k with no down payment, and I get a breakeven in 5 years with 5% appreciation and 3% rent increase (which is a net win with average mortgages lasting ~7 years); this is the sensitive part of the calculation, because if I just drop the 5%/yr to 4%, the time stretches out to 10 years. In point of fact, in my area (and yours!) it's more like 8% over the last 15 years which makes it break even in ONE year.
Sure: today is a lousy time to buy. But in the high-demand places (which also happen to have physical limits), appreciation will outstrip everything for the forseeable future. People wondered after 9/11: will Manhattan become less desireable, now that it looks like a sitting duck? Answer: NFW.
/jordan