With price appreciation slowing in some of the more expensive housing markets, it’s taking even longer for equity to offset the high upfront costs of homebuying
Breaking even in some of the most expensive U.S. home markets will now take an even longer time, according to new data from real estate and rental marketplace Zillow.
Home equity accumulates faster when home values grow quickly, but that is not the case for expensive areas such as Silicon Valley and the Bay Area, where home value appreciation is slowing down.
Nationwide, Zillow’s “Breakeven Horizon” is just under two years — but again, such is not the case for North California cities San Jose, where it takes two years more to break even, and San Francisco, with 1.5 years more.
Washington, D.C., is slightly better; breaking even can now be expected after 3.5 years — a year faster than it was a year ago.
Nationwide, home value growth increased by the end of last year, with a 6.8% annual appreciation rate.
"There are many factors that go into the decision on whether to rent or buy," said Zillow Chief Economist Svenja Gudell. "Zillow's Breakeven Horizon can help people better understand the longer-term financial calculation. It's also helpful for buyers to understand that as home value appreciation moderates, it will take them longer to break even than in past years. San Jose buyers, for example, will have to stay in a home for at least five years to offset the high upfront costs necessary to make that purchase."
Here’s how long it takes to break even in some of the country’s major housing markets, according to Zillow:
Home equity accumulates faster when home values grow quickly, but that is not the case for expensive areas such as Silicon Valley and the Bay Area, where home value appreciation is slowing down.
Nationwide, Zillow’s “Breakeven Horizon” is just under two years — but again, such is not the case for North California cities San Jose, where it takes two years more to break even, and San Francisco, with 1.5 years more.
Washington, D.C., is slightly better; breaking even can now be expected after 3.5 years — a year faster than it was a year ago.
Nationwide, home value growth increased by the end of last year, with a 6.8% annual appreciation rate.
"There are many factors that go into the decision on whether to rent or buy," said Zillow Chief Economist Svenja Gudell. "Zillow's Breakeven Horizon can help people better understand the longer-term financial calculation. It's also helpful for buyers to understand that as home value appreciation moderates, it will take them longer to break even than in past years. San Jose buyers, for example, will have to stay in a home for at least five years to offset the high upfront costs necessary to make that purchase."
Here’s how long it takes to break even in some of the country’s major housing markets, according to Zillow:
| Metropolitan Area | Breakeven Horizon, 2016 Q4 | Breakeven Horizon, 2015 Q4 |
| United States | 1 year, 11 months | 1 year, 10 months |
| New York/Northern New Jersey | 2 years, 6 months | 3 years, 2 months |
| Los Angeles-Long Beach-Anaheim, CA | 4 years, 2 months | 4 years, 1 month |
| Chicago, IL | 2 years | 2 years, 1 month |
| Dallas-Fort Worth, TX | 1 year, 6 months | 1 year, 3 months |
| Philadelphia, PA | 2 years, 5 months | 2 years, 10 months |
| Houston, TX | 1 year, 11 months | 1 year, 5 months |
| Washington, DC | 3 years, 6 months | 4 years, 5 months |
| Miami-Fort Lauderdale, FL | 2 years, 3 months | 2 years, 6 months |
| Atlanta, GA | 1 year, 5 months | 1 year, 5 months |
| Boston, MA | 2 years, 8 months | 3 years, 1 month |
| San Francisco, CA | 4 years, 6 months | 2 years, 11 months |
| Detroit, MI | 1 year, 5 months | 1 year, 4 months |
| Riverside, CA | 2 years, 2 months | 1 year, 10 months |
| Phoenix, AZ | 2 years, 5 months | 2 years, 4 months |
| Seattle, WA | 2 years, 5 months | 1 year, 11 months |
| Minneapolis-St Paul, MN | 2 years, 3 months | 2 years, 3 months |
| San Diego, CA | 4 years, 1 month | 3 years, 5 months |
| St. Louis, MO | 1 year, 10 months | 1 year, 9 months |
| Tampa, FL | 1 year, 5 months | 1 year, 11 months |
| Baltimore, MD | 2 years, 5 months | 3 years |
| Denver, CO | 2 years, 3 months | 1 year, 9 months |
| Pittsburgh, PA | 2 years | 1 year, 9 months |
| Portland, OR | 2 years, 1 month | 2 years, 1 month |
| Charlotte, NC | 1 year, 8 months | 1 year, 9 months |
| Sacramento, CA | 2 years, 5 months | 2 years, 1 month |
| San Antonio, TX | 1 year, 9 months | 1 year, 6 months |
| Orlando, FL | 1 year, 5 months | 1 year, 11 months |
| Cincinnati, OH | 1 year, 8 months | 1 year, 7 months |
| Cleveland, OH | 1 year, 10 months | 1 year, 6 months |
| Kansas City, MO | 1 year, 7 months | 1 year, 6 months |
| Las Vegas, NV | 1 year, 10 months | 1 year, 8 months |
| Columbus, OH | 1 year, 9 months | 1 year, 8 months |
| Indianapolis, IN | 1 year, 4 months | 1 year, 4 months |
| San Jose, CA | 5 years, 2 months | 3 years, 3 months |
| Austin, TX | 2 years, 5 months | 1 year, 11 months |
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