When clients are considering buying, they often ask us if it is cheaper to buy or rent. Well, Zillow has just released their Breakeven Horizon for 2015 Q4 which calculates the point, in years, at which buying a home or condo becomes less expensive than renting the same home. It takes into account the typical costs of owning and renting including the opportunity costs of buying a home and the growing value of assets other than real estate that you could be accumulating if you rented instead. Then it factors in historic and anticipated real estate value appreciation rates, rental prices and rental appreciation rates.
What's the Breakeven Horizon for Seattle you ask? It will take 1.9 years before buying a home becomes more financially advantageous than renting the same home or condo. A persistent combination of healthy home/condo value growth and low mortgage interest rates, combined with robust growth in rents, is helping to keep the buy vs. rent equation tilted heavily towards buying in most areas, including Seattle, for those planning on staying in their properties for longer than just a few years.
By Marco Kronen with Seattle Condo Review: A guide to Seattle downtown condos.