Timing Is Everything
To many of us, renting a home seems like throwing away money. Shouldn't we buy and let that money build equity, rather than line a landlord's pocket? Turns out that in many major cities it makes perfect financial sense to rent for a few years or more, according to real estate information web site Zillow. Zillow's "breakeven horizon" metric crunches the costs of owning or renting over 30 years -- tracking them, in the case of a home, from purchase to sale. Where the two sets of costs converge is the point after which buying is smarter. For example, if you're going to live in Nashville in for two years, buying won't give you any financial edge over renting, because the breakeven is 2.6 years. In New York, with home values high, let's just say it takes even longer.
Eg.
Denver
Breakeven horizon: 2.8 years
Zillow Rent Index: 9.3%
Homes sold at a loss: 21.13%
Portland
Breakeven horizon: 3.6 years
Zillow Rent Index: 8.6%
Homes sold at a loss: 21.49%
Boston
Breakeven horizon: 3.9 years
Zillow Rent Index: 11.3%
New York
Breakeven horizon: 5 years
Zillow Rent Index: 19.4%
Homes sold at a loss: 13.83%
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