How to determine whether it is better to rent or buy your residence

With residential rents rising each and every month in New York City and in certain cities around the nation, many consumers are evaluating whether it is better to rent or buy a residence.

The web site Zillow has introduced the "breakeven horizon" which is how many years of homeownership it would take before owning a homes becomes more financially advantageous than renting the same home.

Zillow's breakeven horizon is computed at the home level and incorporates all possible costs and benefits associated with buying and owning a home, such as the down payment, purchase costs, mortgage payments, property taxes, utilities, maintenance costs, tax benefits, etc., as well as all the costs associated with renting the same home. It also includes expected home value and rental price appreciation.

According to the latest data from Zillow, nearly 75 percent of the 200 metro areas it surveyed would see homeowners reach a "breakeven point", in three years or less.

Top 10 cities where it makes more financial sense to rent:

                                    City                                          Breakeven time (years)

San Jose                                                                             8.3

Honolulu                                                                              6.0

San Francisco,                                                                    5.9

New York City                                                                      5.1

Boston, Mass                                                                      4.3

Los Angeles                                                                         4.3

Seattle                                                                                   4.0

San Diego                                                                             3.6

Washington, D.C.                                                                 3.5

Portland                                                                                3.5                  

 

New York-Northern New Jersey-Long Island, NY-NY-PA (5.1 years) Selected Cities

 

Hewlett Bay Park                                                                    19.1

Kings Point, NY                                                                      17.4

Sands Point                                                                              16.2

Old Westbury                                                                           14.7

Brookville, NY                                                                        14.0

Alpine, NJ                                                                                13.7

Summit, NJ                                                                              12.1

Muttontown, NY                                                                      11.8

Woodbury, NY                                                                          9.1

Roslyn Harbor                                                                          7.6

Great Neck Estates                                                                  7.2

Lake Success, NY                                                                    6.3

Woodmere                                                                                5.8

Jericho, NY                                                                              5.1

Posted on September 30, 2012 .