There is now a better way to decide if you should rent or buy. No more simply comparing average rents to average home prices, and no more doing napkin math to figure out what will cost more in the long run. We’ve gone beyond that and simplified it into something that is easy to digest, the “breakeven horizon.”

The breakeven horizon is the number of years you will need to own and live in a home until it becomes more financially advantageous than renting the same home.

So how does it work?

Let’s say that you are moving to Seattle for a new job. You anticipate being in the area for roughly 4-5 years. So, do you buy a home or do you rent? Well, it all depends on where you are looking to live. If you’re looking to live within the city of Seattle, it is likely better to rent because according to the Zillow analysis, you’ll need to live in the home for at least 5.4 years to make buying more financially advantageous than renting. But, if you are looking to live south of Seattle, in Tacoma, buying is likely the best option for you. That is because the breakeven horizon in Tacoma is 2.8 years. This means that after all of the purchase and selling costs (assuming you would sell in 4-5 years), taxes, maintenance, appreciation and opportunity costs, you would have more cash in your pocket after you hit the 2.8-year mark if you bought than if you rented.

Use the interactive graphic below to find the breakeven horizon for the city you plan to move to next. Just select the metro areas and scroll through the list below.

About the Author

Alison writes about rental and mortgage market trends for Zillow Blog.

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