2014

In Almost Two-Thirds Of U.S. Metros, Buying Beats Renting In Three Years Or Less Now Available at Neighborhood & ZIP Code-Level, Zillow Breakeven Horizon Finds Southwest, Midwest Best for Quickly Recouping Buying Costs; Northeast Corridor Better for Long-Term Renters

SEATTLE, May 16, 2013 /PRNewswire/ -- In 64 percent of metro areas nationwide, buying a home is a better financial decision than renting for home buyers intending to stay in their home for at least three years, according to a first quarter analysis from online real estate marketplace Zillow®.

Zillow's breakeven horizon incorporates all possible costs associated with buying and renting, including upfront payments, closing costs, anticipated monthly rent and mortgage payments, insurance, taxes, utilities and maintenance costs. It then factors in historic and anticipated home value appreciation rates, rental prices and rental appreciation rates to help calculate the point, in years, at which buying becomes less expensive than renting.i

Among the 30 largest metro areas analyzed by Zillow in the first quarter, those with the shortest breakeven horizon were Miami (2 years), Detroit (2 years) and Phoenix (2.1 years). Large metros with the longest breakeven horizon in the first quarter included New York (5.2 years), Boston (4.1 years) and San Jose (3.7 years). Within metro areas, the breakeven horizon will vary in individual counties, cities, neighborhoods and ZIP codes.

For the first time, the breakeven horizon was applied to the ZIP code and neighborhood levels within individual cities. Because neighborhood selection is such a critical part of the home shopping process, the breakeven tool can be more valuable at these smaller geographic levels.

For example, the breakeven horizon for New York City as a whole is 6.1 years. But at the neighborhood level, the breakeven horizon ranges from a low of 2.5 years in the Parkchester neighborhood in the Bronx, to a high of 11.9 years in the Carnegie Hill section of Manhattan. Nationwide, the neighborhood with the lowest breakeven horizon is the Shelby Forest-Frayser neighborhood in Memphis, Tenn., at just one year. The neighborhood with the longest breakeven horizon is the Sandbridge area of Virginia Beach, Va., at 20.3 years. To determine the breakeven horizon in your city or neighborhood, use our interactive tool here.

"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 Zillow Chief Economist Dr. Stan Humphries. "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."

The breakeven horizon is primarily impacted by the expected rate of home value appreciation in a given area. In areas where home values are expected to appreciate more quickly in coming years, the time it takes to recoup upfront costs will be lower and thus the breakeven period will be shorter. In areas where home values are expected to rise more slowly, or even fall, the breakeven horizon will be longer.

Top 30 Metro Areas Covered By Zillow

ZIP code-level variance

w/in larger metro

(years)

Metro Name

Overall Metro Breakeven

(Years)

Low

High

New York, NY

5.2

2.5

11.5

Los Angeles, CA

3.5

1.9

12.9

Chicago, IL

2.8

1.1

8.3

Dallas-Fort Worth, TX

2.3

1

4.9

Philadelphia, PA

3.6

1

10.6

Washington, DC

3.5

1.2

7

Miami-Fort Lauderdale, FL

2

1.1

4.4

Atlanta, GA

2.5

1.1

4.5

Boston, MA

4.1

2.4

7.1

San Francisco, CA

3.4

2.1

6.2

Detroit, MI

2

1

5.7

Riverside, CA

2.2

1

4.2

Phoenix, AZ

2.1

1.4

3

Seattle, WA

3.6

2.3

4.9

Minneapolis-St Paul, MN

2.6

1.7

3.5

San Diego, CA

3.4

2

7.2

St. Louis, MO

3.3

1

8.2

Tampa, FL

2.3

1

4.3

Baltimore, MD

2.9

1.1

4.6

Denver, CO

2.8

2

4.1

Pittsburgh, PA

2.5

1.1

4.8

Portland, OR

3

2.2

4.1

Sacramento, CA

2.6

2

5.2

Orlando, FL

2.4

1.3

3.8

Cincinnati, OH

2.5

1.3

4

Cleveland, OH

2.4

1.1

3.9

Las Vegas, NV

3

1.1

9.9

San Jose, CA

3.7

2.8

5.1

Columbus, OH

2.7

1.2

8.8

Charlotte, NC

2.8

1.5

4.1

The breakeven horizon is available in 11,616 ZIP codes, 7,702 neighborhoods, 8,546 cities, 495 counties and 266 metropolitan areas nationwide. Nationally, the breakeven horizon was 3.1 years at the end of the first quarter.

For more information on the first quarter breakeven horizon analysis, please visit our Zillow Research blog or email press@zillow.com.

About Zillow:
Zillow, Inc. (NASDAQ: Z) operates the largest home-related marketplaces on mobile and the Web, with a complementary portfolio of brands and products that help people find vital information about homes, and connect with the best local professionals. In addition, Zillow operates an industry-leading economics and analytics bureau led by Zillow's Chief Economist Dr. Stan Humphries. Dr. Humphries and his team of economists and data analysts produce extensive housing data and research covering more than 350 markets at Zillow Real Estate Research. Zillow also sponsors the quarterly Zillow Home Price Expectations Survey, which asks more than 100 leading economists, real estate experts and investment and market strategists to predict the path of the Zillow Home Value Index over the next five years. The Zillow, Inc. portfolio includes Zillow.com®, Zillow Mobile, Zillow Mortgage MarketplaceZillow Rentals, Zillow Digs™, Postlets®, Diverse Solutions®, Buyfolio™, Mortech™ and HotPads™. The company is headquartered in Seattle.

Zillow.com, Zillow, Zestimate, Postlets and Diverse Solutions are registered trademarks of Zillow, Inc. Buyfolio, Mortech, HotPads and Digs are trademarks of Zillow, Inc.

i The full breakeven methodology can be found on our Zillow Research blog here: http://www.zillowblog.com/research/2012/11/27/rent-vs-buy-breakeven-horizon-analysis-methodology-updated/ 

SOURCE Zillow, Inc.



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