Buying a home is more affordable than renting in nearly two-thirds of metros after three years of paying for a mortgage, according ""Zillow."":http://www.zillow.com/[IMAGE]
For its calculation, Zillow considered costs associated with buying and renting, such as upfront payments, closing costs, insurance, utilities, and maintenance. Then, the online marketplace looked at historic and anticipated home value appreciation rates, rental prices, and rental appreciation rates to determine how many years would need to pass before buying becomes less expensive than renting.
According to Zillow, in 64 percent of U.S. metros, buying is more affordable than renting if homebuyers plan to stay in their home for at least three years.
""Locally high home value appreciation in many areas, combined with historically low mortgage rates and low home prices relative to recent peaks, has made buying a home a more advantageous financial decision than renting for many would-be buyers,"" said Dr. Stan Humphries, Zillow's chief economist.
In several large metros, it would only take around two years before a buyer reached what Zillow called the ""breakeven horizon,"" or the time it takes for buying to become more financially advantageous than renting.[COLUMN_BREAK]
Out of the 30 largest metro areas, Zillow found Miami and Detroit had the shortest breakeven timeline of just two years in the first quarter.
In Phoenix, the breakeven horizon was 2.1 years, while Riverside, California and Dallas followed closely behind at 2.2 years and 2.3 years, respectively.
In other large metros, buyers would have to hold onto their homes for a much longer period of time before buying is more affordable.
In New York, buyers would need to stay in their homes for 5.2 years before reaching the breakeven horizon. Other metros with longer timelines included Boston (4.1 years) and San Jose (3.7 years).
Zillow also provided breakeven horizons on the ZIP code and neighborhood levels within cities.
According to the report, in New York, the breakeven horizon could be as low as 2.5 years in the Parkchester neighborhood in the Bronx, but could be as high as 11.9 years in the Carnegie Hill section of Manhattan.
In several ZIP codes, the breakeven horizon was as low as 1 year, including areas within Dallas, Philadelphia, Detroit, Riverside, St. Louis, and Tampa. One the other extreme, the breakeven horizon for a Los Angeles ZIP code was 12.9 years.
To find the specific breakeven horizon in one's city, Zillow has an ""interactive tool."":http://www.zillowblog.com/research/2013/05/06/2013-q1-breakeven-horizon-expanded-to-neighborhood-zip-codes/
""The decision to buy or rent should always take into account a number of factors, one of which is how long a buyer or renter plans to stay in a property. Even in areas with relatively low breakeven horizons, buyers should resist the temptation to buy and sell properties based only on short-term goals. And renters in these areas should never feel compelled to stretch themselves to buy if it is currently beyond their means,"" Humphries advised.