For buyers in the most expensive housing markets, it now takes longer than it did a year ago for ownership to be more beneficial than renting, according to Zillow.
Nationwide, it took one year and 11 months to reach the breakeven point as of the fourth quarter, Zillow said in a report released Thursday. A year ago, it only took one year and 10 months.
Its Breakeven Horizon report measures the amount of time it takes before buying a home becomes more financially beneficial than renting. To produce these figures, Zillow compares the cost of owning a home with the cost to rent at the end of each year for 30 years, assuming that a 30-year fixed-rate mortgage is used to purchase the property.
The longer breakeven period is a reflection of slowing home value price appreciation, Zillow said. And some of the nation’s most expensive — and most popular — housing markets were most affected.
In San Francisco, it now takes four years and six months to break even, as opposed to a year ago when it only took two years and 11 months.
It takes longer to break even on a home purchase in San Jose, Calif., than in any other metropolitan area at five years and two months. A year ago in San Jose, it only took three years and three months to break even.
Still, not every city across the country is experiencing these issues. For instance, in Orlando, Fla., the time to break even dropped from one year and 11 months last year to one year and five months in Zillow’s most recent report.
Indianapolis has the shortest wait time of any city to break even at one year and four months, which is the same time frame as last year.