Thursday, June 4, 2026
Zillow: Buying a home no longer a universal financial win
In San Diego, a typical homebuyer breaks even compared with renting after 23.3 years, according to a new analysis by Zillow.
A new analysis by Zillow suggests the long-held belief that buying a home is always a better financial decision than renting depends largely on where people live and how long they plan to stay.
Nationally, a typical homebuyer breaks even compared with renting after about six years, according to the real estate data company's latest rent-versus-buy study. That figure has improved from a peak of 8.4 years in October 2023, reflecting shifting housing market conditions.
The report places San Diego among the least favorable major U.S. markets for buying versus renting from a purely financial perspective.
In San Diego, the break-even point is 23.3 years, which stems from the large gap between the cost of owning and the cost of renting. High home prices mean buyers face substantially higher monthly costs than renters, making it take much longer for home appreciation and equity gains to offset the upfront and ongoing expenses of ownership, according to Zillow.
Only three metros performed worse for buyers: San Francisco, San Jose and New Orleans, where renting beats buying over the life of a 30-year fixed-rate mortgage.
The analysis examined the financial outcomes of buying versus renting over the full life of a 30-year mortgage in the nation's 50 largest metropolitan areas. Researchers factored in mortgage payments, property taxes, insurance, maintenance and closing costs for homeowners, while also accounting for rent payments, renter's insurance and potential investment returns on money not used for a down payment.
The results varied dramatically by region.
In many Midwest and Southern markets, buying a home becomes financially advantageous relatively quickly. The shortest break-even period was found in Columbus, Ohio, where homeowners typically emerge ahead after 4.1 years. Memphis, Tenn.; Buffalo; Indianapolis; Cincinnati; and Louisville, Ky., all posted break-even periods of less than five years.
Zillow economists said these markets generally feature a more balanced relationship between home prices and rents, allowing homeowners to recover ownership costs more quickly while benefiting from steady appreciation.
By contrast, renting remained the more financially favorable option in some of the nation's most expensive housing markets.
In addition to San Diego, San Francisco, San Jose and New Orleans, other high-cost markets required much longer ownership periods before buying became advantageous, including Seattle at 19.7 years, Austin at 18.4 years and Los Angeles at 17.1 years.
"The truth is more complicated" than the conventional wisdom that homeownership is always the smartest financial move, Zillow senior economist Orphe Divounguy said in a statement. He said the study shows both renting and buying can be sound financial decisions depending on local market conditions.
Among major metropolitan areas, New York had a break-even point of 12.5 years, Washington, D.C., 12 years, and Boston 13.9 years. Miami registered nine years, while Chicago came in at 6.5 years.
The study also challenged the traditional recommendation that buyers should always make a 20% down payment.
According to Zillow, smaller down payments can sometimes produce faster financial returns because buyers retain more cash that can be invested elsewhere. In Cincinnati, for example, a buyer making a 5% down payment reached the break-even point about six months sooner than a buyer putting down 20%, the analysis found.
The study noted, however, that larger down payments may still make sense in markets where monthly ownership costs substantially exceed rental costs.
Mortgage rates also play a significant role in determining whether buying makes financial sense. Zillow said a one-percentage-point decline in mortgage rates could make homeownership financially attractive to millions more households, while a similar increase could return conditions to the more challenging environment seen in 2023 and 2024.
Zillow home trends expert Amanda Pendleton said the decision increasingly involves lifestyle considerations as well as finances.
Factors such as stability, building equity, and the ability to customize a home continue to attract buyers, while renters may value flexibility, liquidity and freedom from maintenance expenses.
The report concludes that buying generally makes the most financial sense for households planning to remain in a home for more than six years nationally, while renting may be preferable for those expecting to move sooner or living in some of the nation's most expensive housing markets.
Nationally, a typical homebuyer breaks even compared with renting after about six years, according to the real estate data company's latest rent-versus-buy study. That figure has improved from a peak of 8.4 years in October 2023, reflecting shifting housing market conditions.
The report places San Diego among the least favorable major U.S. markets for buying versus renting from a purely financial perspective.
In San Diego, the break-even point is 23.3 years, which stems from the large gap between the cost of owning and the cost of renting. High home prices mean buyers face substantially higher monthly costs than renters, making it take much longer for home appreciation and equity gains to offset the upfront and ongoing expenses of ownership, according to Zillow.
Only three metros performed worse for buyers: San Francisco, San Jose and New Orleans, where renting beats buying over the life of a 30-year fixed-rate mortgage.
The analysis examined the financial outcomes of buying versus renting over the full life of a 30-year mortgage in the nation's 50 largest metropolitan areas. Researchers factored in mortgage payments, property taxes, insurance, maintenance and closing costs for homeowners, while also accounting for rent payments, renter's insurance and potential investment returns on money not used for a down payment.
The results varied dramatically by region.
In many Midwest and Southern markets, buying a home becomes financially advantageous relatively quickly. The shortest break-even period was found in Columbus, Ohio, where homeowners typically emerge ahead after 4.1 years. Memphis, Tenn.; Buffalo; Indianapolis; Cincinnati; and Louisville, Ky., all posted break-even periods of less than five years.
Zillow economists said these markets generally feature a more balanced relationship between home prices and rents, allowing homeowners to recover ownership costs more quickly while benefiting from steady appreciation.
By contrast, renting remained the more financially favorable option in some of the nation's most expensive housing markets.
In addition to San Diego, San Francisco, San Jose and New Orleans, other high-cost markets required much longer ownership periods before buying became advantageous, including Seattle at 19.7 years, Austin at 18.4 years and Los Angeles at 17.1 years.
"The truth is more complicated" than the conventional wisdom that homeownership is always the smartest financial move, Zillow senior economist Orphe Divounguy said in a statement. He said the study shows both renting and buying can be sound financial decisions depending on local market conditions.
Among major metropolitan areas, New York had a break-even point of 12.5 years, Washington, D.C., 12 years, and Boston 13.9 years. Miami registered nine years, while Chicago came in at 6.5 years.
The study also challenged the traditional recommendation that buyers should always make a 20% down payment.
According to Zillow, smaller down payments can sometimes produce faster financial returns because buyers retain more cash that can be invested elsewhere. In Cincinnati, for example, a buyer making a 5% down payment reached the break-even point about six months sooner than a buyer putting down 20%, the analysis found.
The study noted, however, that larger down payments may still make sense in markets where monthly ownership costs substantially exceed rental costs.
Mortgage rates also play a significant role in determining whether buying makes financial sense. Zillow said a one-percentage-point decline in mortgage rates could make homeownership financially attractive to millions more households, while a similar increase could return conditions to the more challenging environment seen in 2023 and 2024.
Zillow home trends expert Amanda Pendleton said the decision increasingly involves lifestyle considerations as well as finances.
Factors such as stability, building equity, and the ability to customize a home continue to attract buyers, while renters may value flexibility, liquidity and freedom from maintenance expenses.
The report concludes that buying generally makes the most financial sense for households planning to remain in a home for more than six years nationally, while renting may be preferable for those expecting to move sooner or living in some of the nation's most expensive housing markets.
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