To Buy or to Rent?

Posted by admin  at August 2nd, 2012

Many consumers and investors have always wondered if it is better to buy or rent a home. When considering these two choices, people tend to look at the price-to-rent ratio. This can be calculated by comparing the median sale price of available homes to the median annual rental price of available rentals. This ratio is still useful to an investor who is planning to buy and rent out properties, but to a consumer, the ratio is still lacking major factors such as property taxes, transaction costs, and maintenance costs.

This is why Zillow has introduced a new formula to calculate something called a “breakeven horizon.” This will give you a solid number in years. If you plan to stay in a home for less years than its breakeven number, it is better to rent than to buy. And if you plan to stay in said home for over the breakeven number, it is better to buy. Zillow incorporates all the benefits of renting and buying the same home and finds out at what year of staying in the home is it financially more efficient to buy. Contact us for more information.

Check out Zillow’s graph to see what the average breakeven horizon is in your neighborhood. http://www.zillow.com/blog/research/2012/08/01/should-you-buy-or-rent-depends-on-how-long-you-want-to-stay-and-where-you-want-to-live-of-course/