Whether to rent or buy has always been a great debate, but the real estate experts at Zillow shed some light — and the news is good for new and wannabe homebuyers in Dallas. Turns out we have the shortest "breakeven horizon" in the country of the 35 largest U.S. metros.
In the Dallas-Fort Worth-Arlington metro, as of the fourth quarter of 2014, the breakeven horizon is about one year and two months, compared to the national average of one year and nine months — which is up one-and-a-half months since the second quarter of 2014. Following Dallas in the top five shortest breakeven horizons are Indianapolis (one year and three months), Detroit (one year and four months) and Riverside (almost one and a half years).
The Zillow breakeven horizon estimates the typical time it takes for the accruing costs of renting a home in a given area to exceed the costs of having purchased the same home.
In other words, is a home worth the hard costs associated with the purchase — closing costs, property taxes, maintenance and renovations, and insurance — or should you keep renting and invest that money instead? It depends on a few factors, including expected home value appreciation, expected rental inflation and price-to-rent ratio.
In markets where home value forecasts are strong, equity would more quickly overtake those costs. But if rent becomes cheaper relative to home values, then the breakeven horizon lengthens, so renting could be a better option in some cases, despite stronger forecasts for home value growth.
As for the longest breakeven horizons, those are in Los Angeles (five years), Washington, D.C. (four years and two months), San Diego (three years and 10 months) and Boston (three years and five months).
You can read more about the breakeven horizon — and see some fancy charts breaking down the data — on Zillow.