Buying beats renting in most U.S. cities

@CNNMoney August 2, 2012: 11:10 AM ET
Buying  a home in most major markets will end up being cheaper than renting one.

Buying a home in most major markets will end up being cheaper than renting one.

NEW YORK (CNNMoney) -- For people who are willing to stay put for a few years, buying a home has become a much better deal than renting in almost every major housing market in the nation.

In more than 75% of the 200 metro areas analyzed by real estate listing web site Zillow, homeowners would reach a "breakeven point" -- where owning the home makes better financial sense than renting it -- in three years or less.

"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, chief economist for Zillow.

The survey was Zillow's first buy-versus-rent analysis, incorporating all homeownership costs, including down payments, closing costs, mortgage payments, property taxes, utilities and maintenance costs, and compared them to rental costs. It also took into account projected home price appreciation and rent increases, as well as tax deductions and inflation.

Zillow's findings support other reports that show that rising rents, record-low mortgage rates and falling home prices have made homeownership a more attractive option.

In some of the metro areas Zillow looked at, home buyers would break even in less than two years.

In Miami, for example, a homebuyer would only have to stay in their home for about 1.6 years for the purchase to pay off, Zillow said.

Homes in the metro area are selling for about 45% less than they were five years ago. Meanwhile, over the past three years, rents have climbed 20%, according to RentJungle.

Miami's metro area, along with Tampa, Fla., Memphis, Tenn., and several smaller cities, have the shortest break-even times of the markets Zillow analyzed.

Renters still have the upper hand in some cities. It would take home buyers in San Jose, Calif., 8.3 years to break even on their homes -- the longest period of time of any of the metro areas Zillow surveyed. Other big cities where buying was not such a good a deal were Honolulu, at a six-year break-even point, and San Francisco at 5.9 years. To top of page

Buy vs. rent in 30 major cities
City State Breakeven time in years
New YorkN.Y.5.1
Los AngelesCalif.4.3
ChicagoIll.2.8
DallasTexas2.1
PhiladelphiaPa.3
WashingtonD.C.3.5
MiamiFla.1.6
AtlantaGa.2.5
BostonMass.4.3
San FranciscoCalif.5.9
DetroitMich.1.7
RiversideCalif.2
PhoenixAriz1.7
SeattleWash.4
MinneapolisMinn.2.7
San DiegoCalif.3.6
TampaFla.1.6
St. LouisMo.2.5
BaltimoreMd.2.8
DenverColo.2.5
PittsburghPa.2.1
PortlandOre.3.5
SacramentoCalif.3.1
OrlandoFla.1.7
CincinnatiOhio2.1
ClevelandOhio2.4
Las VegasNev.1.7
San JoseCalif.8.3
ColumbusOhio2.4
CharlotteN.C.2.7
Source: Zillow

Overnight Avg Rate Latest Change Last Week
30 yr fixed3.80%3.88%
15 yr fixed3.20%3.23%
5/1 ARM3.84%3.88%
30 yr refi3.82%3.93%
15 yr refi3.20%3.23%
Rate data provided
by Bankrate.com
View rates in your area
 
Find personalized rates:
Find Homes for sale
  • Property Type
  • Find a home in:
    New York | Atlanta | Chicago | Los Angeles
    Washington D.C | Houston | Philadelphia | More options

Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.