Are you staying put for at least three years? Savvy financial experts
recommend you buy versus rent!
A new analysis by
Zillow, a
real estate information marketplace, providing vital information about homes,
real estate listings and mortgages, reveals that the "break-even horizon" in
more than 200 metros and 7,500 U.S. cities is three years (or less!). This is
great news for wary buyers who have been fearful of declining home values in
many cities.
These hard-hit cities are making a come back. The report found that in some
of these areas the break-even horizon was less than two years!
"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 Chief Economist.
"This is the first analysis of metros and cities that presents the buy versus
rent decision in an intuitive way, by telling consumers how long they must live
in the home before buying breaks even with renting financially. It's much more
understandable, and therefore useful, than the abstract notion of a simple ratio
of prices to rents. If we want consumers to act on market information, we have
to align it with how they think about the issue and make it straight-forward to
grasp."
This analysis took into account the full picture of homeownership:
downpayment, mortgage, transaction costs, property taxes, utilities,
maintenance, tax deductions, and adjustments for inflation and forecasted home
values. It also figured rental payments, utilities, and rental price
appreciation.
This sunny outlook is not the case in all areas, however. A local real estate
professional should be able to tell you the course of your local market and
whether or not home values are once again on the rise. There may even be
differences from one local community to the next. For example, 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, they must live in the
home for 14.1 years.
It all depends on the area. The Miami-Ft. Lauderdale metro is among the most
favorable for buying, with homeowners breaking even after only 1.6 years of
living in the home. However, in the San Jose metro, where home values are among
the highest in the nation, a buyer must commit to living in their home for 8.3
years before they will break even.
Zillow reports "Metros where it takes more than five years to reach the
breakeven point accounted for 7 percent of the 224 metros covered by the report.
The metros with the longest breakeven horizons are San Jose, Calif. (8.3 years),
Oak Harbor, Wash. (7.2 years), Santa Cruz, Calif. (7.1 years), San Luis Obispo,
Calif. (6.3 years) and Salinas, Calif. (6.3 years). The metros with the shortest
breakeven horizon are Memphis, Tenn., Miami-Ft. Lauderdale, Fla., Salisbury,
Md., Red Bluff, Calif., Mobile, Ala., Tampa, Fla. and Fernley, Nev. (all tied at
1.6 years)."
Written by Carla Hill
Thinking
about Buying or
Selling?
Call Alvin's Team Today!
877-651-7810
Or visit our
website:
www.LivingLakeTahoe.com
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