Buying a Home Increasingly Beats Renting, Zillow Says

What's Hot


2 Types of Black Marks Might Vanish From Your Credit File SoonBorrow

6 Ways the Obamacare Overhaul Might Impact Your WalletInsurance

7 Dumb and Costly Moves Homebuyers MakeBorrow

This Free Software Brings Old Laptops Back to LifeMore

Obamacare Replacement Plan Gets ‘F’ Rating from Consumer ReportsFamily

Beware These 12 Common Money MistakesCredit & Debt

21 Restaurants Offering Free Food Right NowSaving Money

17 Ways to Have More Fun for Less MoneySave

House Hunters: Beware of These 6 Mortgage MistakesBorrow

30 Household Uses for Baby OilSave

25 Ways to Spend Less on FoodMore

Nearly Half of Heart-Related Deaths Linked to These 10 Foods and IngredientsFamily

5 Surprising Benefits of Exercising Outdoors in WinterFamily

10 Ways to Save When You’re Making Minimum WageSave

Boost Your Credit Score Fast With These 7 MovesCredit & Debt

7 Painless Ways to Pay Off Your Mortgage Years EarlierBorrow

The Most Sinful City in the U.S. Is … (Hint: It’s Not Vegas)Family

The True Cost of Bad CreditCredit & Debt

10 Companies With the Best 401(k) PlansGrow

This Scam Now Tops ID Theft as the No. 2 Consumer ComplaintFamily

6 Stores With Awesome Reward ProgramsFamily

6 Ways to Save More at Lowe’s and The Home DepotSave

6 Healthful Treats for Your DogFamily

New Study Ranks the Best States in the U.S.Family

Thousands of Millionaires Moving to 1 Country — and Leaving AnotherGrow

Strapped for College Costs? How to Get the Most From FAFSABorrow

6 Overlooked Ways to Save at Chick-fil-AFamily

Ask Stacy: What’s the Fastest Way to Pay Off My Mortgage?Borrow

Where to Sell Your Stuff for Top DollarAround The House

8 Ways to Get a Good Price on a Shiny New AutoCars

Ask Stacy: How Do I Start Over?Credit & Debt

Secret Cell Plans: Savings Verizon, AT&T, T-Mobile and Sprint Don’t Want You to Know AboutFamily

30 Awesome Things to Do in RetirementCollege

14 Super Smart Ways to Save on TravelSave

The Rich Prefer Modest Cars — Should You Join Them?Cars

You’ll Soon Pay More to Shop at CostcoSave

10 Ways to Save When Your Teen Starts DrivingFamily

There’s new evidence that buying a home is a better financial decision than renting after just two years in many locations.

You might want to think twice before you renew your lease.

A new report by real estate website Zillow says it takes just two years for homeowners to see the payoff in buying over renting in about half of U.S. metropolitan areas.

Zillow’s “break-even horizon” analysis provides you with a concrete number of years you would need to live in a home for the costs of renting to exceed the costs of buying.

For example, if you live in Denver, your break-even horizon is 2.6. So if you buy and live in a home for more than 2.6 years in Denver, you will have more money and assets than if you had rented that home over the same period of time.

Zillow said it accounted for a number of costs when calculating the break-even horizon, including: upfront payments, closing costs, mortgage payments and monthly rent, taxes, insurance, utilities and maintenance. Historical and projected home value and rental appreciation rates, plus current rental prices, were also factored in.

According to a press release, Zillow chief economist Stan Humphries said:

Rents keep rising, and mortgage interest rates remain very low, which is helping to skew the rent vs. buy decision toward buying for those who can afford it. Many renters may ask themselves why renew a lease, when you can break even on the same home in less time in many areas.

It is important to note that not everyone is in a position to purchase a home, nor should everyone do so. You should have a good credit score, a sizable down payment and plans to stay in place for at least five years.

The Seattle-based company said it examined 35 cities in its report and also looked at specific neighborhoods.

The cities with the shortest break-even horizons were:

  • Riverside, Calif. — less than one year.
  • Orlando — one year.
  • Miami-Fort Lauderdale — 1.2 years.

Those with the longest were:

  • Washington, D.C. — 4.2 years.
  • Boston — four years
  • Phoenix — 3.3 years.

If you want to know how long you need to live in a home before the costs of renting exceed those of buying, click here to access Zillow’s interactive tool.

Stacy Johnson

It's not the usual blah, blah, blah

I know... every site you visit wants you to subscribe to their newsletter. But our news and advice is actually worth reading! For 25 years, I've been making people richer without making their eyes glaze over. You'll be glad you did. I guarantee it!

💰🗣📰

Read Next: Costco Releases Dozens of New Deals

Check Out Our Hottest Deals!

We're always adding new deals and coupons that'll save you big bucks. See the deals to the right and hundreds more in our Deals section.

Click here to explore 1,948 more deals!