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Real estate website Zillow has a provocative data point for every renter thinking about buying these days: That move pays off after just three years on average nationwide – and a full year faster in the Buffalo Niagara region.
The company, which lists for-sale and for-rent information on its site, has released a new analysis of what it calls the “break-even horizon,” comparing what it would cost to buy or rent the same home in a number of U.S. markets over time.
The rent-or-buy calculus varies widely depending on where you live.
In the Buffalo Niagara region, the magic number is two years, assuming the buyer has made a 20 percent down payment. Buying wins out after only 1.3 years in the City of Buffalo, while most other communities in the region are tightly packed with break-even points between 1.8 years and the local high of 2.4 years in Grand Island.
It’s two years even in suburbs like Amherst, Cheektowaga, Williamsville, Kenmore, Clarence Center and Springville, 1.9 months in Tonawanda and 2.1 years in Hamburg and East Aurora. Orchard Park is on the higher end at 2.2 years.
The analysis takes into account a host of factors potential buyers should think about when considering the leap, including the down payment, mortgage and rental payments, buying and selling costs, property taxes, utilities, maintenance costs and tax deductions. The analysis adjusts for inflation and forecasts home value and rental price appreciation.
Zillow senior economist Svenja Gudell said the data should help homeowners get a rough and immediate sense of whether buying makes sense in a particular area in relation to their financial situation.
“For a home buyer out there, it is really tough to get a good grip on the buy-versus-rent decision,” Gudell said. Although buying a home is a deeply personal decision, she said, the analysis gives consumers “a sense for ‘Am I ready to make this decision?’”
At the same time, rents are rising, housing affordability is at record levels and mortgage interest rates remain very low. These factors are prompting many renters to consider homeownership.