The ‘breakeven horizon’ for homebuyers in Boston drops by a few months
The complicated calculus people must do when deciding whether to rent or buy a place to live in Boston has shifted slightly in favor of buying, according to the latest quarterly report from Zillow.
As of the first quarter of 2016, Zillow reports that Boston’s “breakeven horizon,” or the point at which homeowners start to save money compared to renters, is two years and nine months. At the end of 2015, it was just over three years, decreasing from 3.4 years at the end of 2014. Just two years ago, the breakeven horizon in Boston was four years.
Two years and nine months (the equivalent of 2.8 years) is still a whole year above the national average. Boston’s breakeven horizon is longer than any city except Los Angeles, New York, Washington, San Francisco, and San Diego.
There is some silver lining, though. Of the cities studied, Zillow compared breakeven horizons to labor markets, finding:
“Breakeven horizons tend to be longer in the nation’s strongest labor markets. Four of the nation’s six metros with breakeven horizons over 2.9 years have had above-average employment growth, and eight of the nation’s 10 metros with annual employment growth of 3.5 percent or more have above-average Breakeven Horizons.”
Boston and its 3.5 percent income growth line up with that trend.
A potential reason Boston’s breakeven horizon saw a small decrease could be that, as Zillow points out, “In most large metros, rent appreciation outpaced home value appreciation, pushing price-to-rent ratios downward – particularly in the Northeast.”
To comment, please create a screen name in your profile
To comment, please verify your email address
Conversation
This discussion has ended. Please join elsewhere on Boston.com