It Takes Longer To Break Even When Owning Instead Of Renting

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February 02, 2017

The Breakeven Horizon from Zillow, which measures the amount of time a person needs to live in a home before buying is financially better than renting, has increased 20 days from a year prior to 1 years and 11 months in Q4 2016.

Zillow says that the slowdown of home value growth in pricey markets, many of which are on the coasts, has lengthened the breakeven point.

The Breakeven Horizon factors in growth in rents and home values, price-to-rent ratios, and mortgage rates.

Over the last year, the breakeven point was pushed back the furthest in places such as San Jose and San Francisco, where it now takes an additional year and a half to justify homeownership to renting.

The breakeven point is lowest in Southern and Midwestern cities such as Memphis (1.1 years), Indianapolis, Orlando, and Atlanta (all 1.4 years).

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