[credit provider=”Flickr/Jon Gos” url=”http://www.flickr.com/photos/jongos/326337675/”]
I’m a happy renter, but if I had the credit score and the savings to buy a home right now, I’d be looking.According to real estate site Zillow.com, buying would be worth it in my city after just 1.6 years, on average.
Before the recession, the rule of thumb was triple that. You’d have to stay put at least four or five years to recoup the costs associated with buying.
But now, Zillow says, it takes less than three years to reach the “breakeven horizon” in more than 150 metro areas.
And that’s factoring in down payment, purchase costs, mortgage payments, property taxes, utilities, maintenance costs, tax benefits, expected home value, and rental-price appreciation.
It’s important to look at the city and not just the metro area, though, as Zillow explains with this example: “The breakeven horizon for the New York metro is 5.1 years; however the city-level breakdown of the New York metro reveals that the breakeven numbers range from 1.4 years in the city of Rossmoor to 24.1 years in the city of Mantoloking.”
While Mantoloking is an extreme example, there are many areas where buying does not make sense for quite a while.
In New York City, for instance, you’re better off renting if you plan to stay less than a decade. The turning point for San Francisco is 7.7 years.
In total, Zillow says there are currently 151 cities where buying pays off in a year or less, more than 2,200 cities inside two, and more than 5,300 cities inside three. But you probably haven’t heard of many of these suburbs and backwaters, so let’s trot out some of the big ones.
Here are 20 major cities (with their metro areas in parenthesis) where buying makes sense after less than three years…
- Detroit, Mich. – 1 year (1.7 years)
- Phoenix, Ariz. – 1.5 (1.7)
- Orlando, Fla. – 1.6 (1.7)
- Las Vegas, Nev. – 1.6 (1.7)
- Cleveland, Ohio – 1.6 (2.4)
- Tampa, Fla. – 1.7 (1.6)
- Pittsburgh, Pa. – 1.8 (2.1)
- Cincinnati, Ohio – 1.9 (2.1)
- Miami, Fla. – 2.0 (1.6)
- Riverside, Calif. – 2.0 (2.0)
- Columbus, Ohio – 2.0 (2.4)
- Baltimore, Md. – 2.0 (2.8)
- Dallas, Texas – 2.1 (2.1)
- St. Louis, Mo. – 2.3 (2.5)
- Philadelphia, Pa. – 2.3 (3.0)
- Charlotte, N.C. – 2.7 (2.7)
- Denver, Colo. – 2.8 (2.5)
- Minneapolis, Minn. – 2.8 (2.7)
- Chicago, Ill. – 2.8 (2.8)
- Atlanta, Ga. – 2.9 (2.5)