In the Denver metro area, buying is a better financial decision than renting if you plan to live in the home for at least 2.5 years, according to a new analysis by Zillow.
Zillow analyzed the “break-even horizon” in more than 200 U.S. metro areas and 7,500 cities to determine how many years it would take before owning a home becomes more financially advantageous than renting the same home.
In more than 75 percent of metro areas analyzed, a homeowner would break even after three years or less of living in the home.
“Across most of the country, historic levels of affordability make buying a home a better decision than ever, especially considering rents have risen more than 5 percent over the past year,” said Stan Humphries, Zillow’s chief economist.
All possible costs associated with buying and renting were incorporated into the analysis, including down payment, mortgage and rental payments, transaction costs, property taxes, utilities, maintenance costs and tax deductions, while adjusting for inflation and forecast home value and rental price appreciation.
In the Denver area, the break-even range is from 1.5 years in Deer Trail to 6.8 years in Bow Mar, with 83.6 percent of Denver metro cities requiring you to live in the home for only three years or less before buying beats renting.
In some metro areas where home values fell dramatically during the housing recession, homebuyers break even after less than two years of owning a home. The Miami-Fort Lauderdale area is among the most favorable for buying, with homeowners breaking even after only 1.6 years. However, in the San Jose, Calif., area, where home values are among the highest in the nation, the break-even point is 8.3 years.
Within metro areas, there is often a sizable variance from one community to the next. In Mill Valley, Calif., just north of San Francisco, a homeowner can break even after 8.8 years, while in similarly priced Menlo Park, south of the city, it takes 14.1 years.
Zillow is a real estate information marketplace, providing vital information about homes, real estate listings and mortgages through its website and mobile applications.
John Mossman: 303-954-1479, jmossman@denverpost.com
