Zillow’s Breakeven Horizon for Rent vs. Buy

Zillow Breakeven 2
When clients are considering buying, they often ask us if it is cheaper to buy or rent. Well, Zillow has just released their Breakeven Horizon for 2015 Q4 which calculates the point, in years, at which buying a home becomes less expensive than renting the same home. It takes into account the typical costs of owning and renting including the opportunity costs of buying a home and the growing value of assets other than real estate that you could be accumulating if you rented instead. Then it factors in historic and anticipated home value appreciation rates, rental prices and rental appreciation rates.

What’s the Breakeven Horizon for Seattle you ask? It will take 1.9 years before buying a home becomes more financially advantageous than renting the same home. A persistent combination of healthy home value growth and low mortgage interest rates, combined with robust growth in rents, is helping to keep the buy vs. rent equation tilted heavily towards buying in most areas, including Seattle, for those planning on staying in their homes for longer than just a few years.

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