It will take homebuyers at least three years to break even on their investment in some of the nation’s largest housing markets, and even longer in others. While homeownership has long been deemed the “American dream,” it may not actually make sense for younger Americans right now, according to researchers at Zillow, a real estate listing and analytics company.
Zillow looked at the “break-even” time horizons in markets across the nation. This is how long it would take for the cost of owning to be equal to the cost of renting, when factoring in down payments, interest rates, home appreciation and rising rents.
Nationally, homebuyers can break even in less than two years in 70 percent of U.S. metropolitan markets, according to Zillow. The pace has accelerated in most of the Midwest, Southeast and from New York to Boston. It has slowed in Florida, Northern California and the stretch of the Northeast between Virginia Beach, Virginia, and Philadelphia.
Buyers in Washington, D.C., have to wait the longest, at 4 ½ years; in Dallas, buyers need only wait 1.3 years. Even in markets with long time horizons, however, homebuying may not be the best choice for younger Americans.
“Even with record-high rents in job centers like San Jose, Boston and Washington D.C., putting off a home purchase might be the best financial decision for a young person who has saved enough for a down payment, depending on how long they intend to stay in their jobs and homes,” said Zillow’s chief economist, Svenja Gudell. “Young workers face a lot of hurdles on the way to homeownership, including saving for a down payment in the first place and deciding where and when to settle down.”[“source -cncb”]