In Nearly 60 Percent of U.S. Metros, Buying Beats Renting in Three Years or Less
Looking at the breakeven horizon will give you a better idea if buying is the better choice vs. renting a home in a given area. If you plan on staying in a home longer than the breakeven horizon, buying is the more financially advantageous choice. If the breakeven horizon is longer than your anticipated tenure in a home, then renting is the way to go. We took into consideration all the costs associated with buying a home (down payment, maintenance, appreciation etc.) and renting the same home (rental payments, transaction costs, appreciation etc.) to determine this breakeven horizon. Look at our methodology piece for more information.
Below are the breakeven horizons by metro and cities within metros for Q3 2012. 152 out of 257 metros (or 59%) have a breakeven horizon of less than three years. Among the 30 largest metros, New York metro has the longest breakeven horizon at close to 5 years, making it a better place to rent for many people. Detroit has a breakeven horizon of 1.7 years, the lowest horizon among the top 30 metros. Therefore, buying in Detroit ends up being more advantageous than renting for many consumers. Search within your metro to find your city’s breakeven number.
