Tuesday, April 16, 2013

You are Better Off Buying a Home than Renting it If Staying Over 3 years



For most buyers who intend to live in a home for at least three years, buying is a better financial decision than renting, according to a new analysis by Zillow.
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%) of metros analyzed, a home owner 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 home owners 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, a home owner 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.
“Across most of the country, historic levels of affordability make buying a home a better decision than ever, especially considering rents have risen more than 5% over the past year,” said Stan Humphries, Zillow chief economist.
Metros where it takes more than five years to reach the breakeven point accounted for 7% 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).  *Source: Zillow


To Buy, Sell or Rent Properties in Miami go to http://www.JuanSolerRealtor.com  

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