Anna Child- 714-398-6913
Buying a home is more affordable than renting in nearly two-thirds of metros after three years of paying for a mortgage, according Zillow.
For its calculation, Zillow considered costs associated with buying and renting, such as upfront payments, closing costs, insurance, utilities, and maintenance. Then, the online marketplace looked at historic and anticipated home value appreciation rates, rental prices, and rental appreciation rates to determine how many years would need to pass before buying becomes less expensive than renting.
According to Zillow, in 64 percent of U.S. metros, buying is more affordable than renting if homebuyers plan to stay in their home for at least three years.
“Locally high home value appreciation in many areas, combined with historically low mortgage rates and low home prices relative to recent peaks, has made buying a home a more advantageous financial decision than renting for many would-be buyers,” said Dr. Stan Humphries, Zillow’s chief economist.
In several large metros, it would only take around two years before a buyer reached what Zillow called the “breakeven horizon,” or the time it takes for buying to become more financially advantageous than renting.
In Huntington Beach, CA Zillow estimated a “break even” of 3.8 years. So if you plan on buying a Huntington Beach home, Zillow estimates you will be better off than renting provided you own for at least 3.8 years.
To find the specific breakeven horizon in another city, Zillow has an interactive tool.
“The decision to buy or rent should always take into account a number of factors, one of which is how long a buyer or renter plans to stay in a property. Even in areas with relatively low breakeven horizons, buyers should resist the temptation to buy and sell properties based only on short-term goals. And renters in these areas should never feel compelled to stretch themselves to buy if it is currently beyond their means,” Humphries advised.