In most of U.S., buying beats renting after only three years:
Zillow analyzed the "breakeven horizon" in more than 200 metros and
7,500 U.S. cities to determine how many years it would take before owning a
home becomes more financially advantageous than renting the same home. In more
than three-quarters (75 percent) of metros analyzed, a homeowner would break
even after three years or less of owning a home.
All possible costs associated with buying and renting were incorporated into
the analysis, including down payment, mortgage and rental payments, transaction
costs, property taxes, utilities, maintenance costs, tax deductions, and
opportunity costs, while adjusting for inflation and forecasted home value and
rental price appreciation.
In some metro areas where home values fell dramatically during the housing
recession, home buyers break even after less than two years of owning a home.
The Miami-Ft. Lauderdale metro is among the most favorable for buying, with
homeowners breaking even after only 1.6 years of living in the home.
However, in the San Jose metro, where home values are among the highest in the
nation, a buyer must commit to living in their home for 8.3 years before they
will break even.
However, within metros, there is often a sizeable variance from one community
to the next. For example, in Mill Valley, Calif., just north of San Francisco,
homeowners can break even after 8.8 years, while in similarly-priced Menlo
Park, south of the city, they must live in the home for 14.1 years.
Metros where it takes more than five years to reach the breakeven point
accounted for 7 percent of the 224 metros covered by the report. The metros
with the longest breakeven horizons are San Jose, Calif. (8.3 years), Oak
Harbor, Wash. (7.2 years), Santa Cruz, Calif. (7.1 years), San Luis Obispo,
Calif. (6.3 years) and Salinas, Calif. (6.3 years). The metros with the
shortest breakeven horizon are Memphis, Tenn., Miami-Ft. Lauderdale, Fla.,
Salisbury, Md., Red Bluff, Calif., Mobile, Ala., Tampa, Fla. and Fernley, Nev.
(all tied at 1.6 years).
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