A recent survey conducted by the real estate website Zillow says that homebuyers in the Phoenix area can expect to break even on their purchase in a little over two years.
According to the site, despite the fact that buyers in most markets can break even on purchases of new homes in less than two years, approximately half of renters in Zillow’s survey say their credit or financial situations have prevented them from becoming home owners.
Per Zillow Chief Economist Dr. Stan Humphries, it’s all about commitment.
“If the buy versus rent decision were about simple math, we’d likely have millions more homebuyers in the market, because the equation is tilted heavily in favor of buying. But no matter what the numbers say, buying a home is a huge commitment. Every day, Americans make decisions to buy or rent based on any number of personal dynamics, including preference, flexibility needs, family factors and, yes, financial considerations. There is no right or wrong choice, and it’s important that America’s housing market maintains a number of affordable options for renters and buyers, no matter their preferences.”
Among the top 35 metropolitan areas in the United States, the Dallas-Fort Worth metroplex provided the lowest “breakeven horizon” at 1.2 years. The highest was Los Angeles, checking in at 5.1 years.
Where does Phoenix rank?
The Zillow survey says that those looking to purchase a home in the Valley can expect to breakeven on their buy in 2.3 years, surpassing the national average by about six months.
The breakeven horizon utilized by Zillow takes in to account costs associated with buying and renting, including upfront payments, closing costs, anticipated monthly rent and mortgage payments, insurance, taxes, utilities, maintenance, and renovation costs. Additionally, the horizon also integrates home equity growth for buyers, and income earned for renters if they invested the same amount of money into an interest-bearing account.