It seems with all the talk about how millennials are shaping the housing market, there is little talk about how millennials are shaping the market for rental investment properties. And with a national average of two years to break even on your first home purchase as opposed to renting, coupled with low inventory across the country and rising home prices throughout, many millennials are renting for longer. These five cities have the longest break even horizon in the country, according to Zillow.
California secured the top 3 spots. Number one: San Jose, California. Located in the center of Silicon Valley in a metro with the highest Home Price Index in the country, you’d have to live in your new home 5.1 years to break even on your investment. Median rent is about $3,460 per month and the median home price tops $997,000.
San Fransisco came in at a close second with a break even horizon of 4.9 years and a median rent of $3,354 per month, and the median home price is $848,400. Given the standard 20 percent downpayment, each of these metros can easily cost homeowners upwards of $150,000
Los Angeles was trailed the other two California metros with a break even horizon of 4.7 years. San Diego tied with Washington D.C. at 4.5 years for the number four spot.
As a point of reference, other major metros break even horizons are as follows: New York City, 2.5 years; Seattle, 2.3 years; Houston, 2.4 years; Chicago, 2.2 years; and Dallas-Fort Worth, 1.6 years. Most cities in the midwest had an average break even horizon falling between 1-2 years, and in the Pacific Northwest, most cities fell in the 2-3 year window. The state of Florida averaged 1-2 years, with the exception of Miami, that averaged nearly 3 years.