Buying a home in Boston is a great deal – so long as the owner stays in it for about two and a half years.
That was the conclusion of Zillow’s latest Breakeven Horizon report, which calculates how long the average homeowner has to stay in a home before it makes more financial sense than renting.
Nationwide, the breakeven horizon in 2016 was 1 year and 11 months. According to the report, that’s a 20-day increase from 2015, and the result of a widespread slowdown in home price appreciation.
Buying in Boston, however, a person needs to own his or her home for two years and a little over seven months before it makes more financial sense than renting (assuming the home appreciates 3.56 percent in the first year). That’s high for both Massachusetts and the nation, as the below table shows.
| City | Median Breakeven Horizon (in years) | Annual Change in Breakeven Horizon (in years) |
|---|---|---|
| San Jose | 5.1 | 1.91 |
| San Francisco | 4.5 | 1.53 |
| Los Angeles | 4.1 | 0.03 |
| Washington, D.C. | 3.5 | -0.97 |
| Hartford, Conn. | 3.1 | -0.32 |
| Virginia Beach | 2.8 | -0.34 |
| Boston | 2.6 | -0.47 |
| New York | 2.5 | -0.65 |
| Milwaukee | 2.5 | 0.37 |
| Seattle | 2.4 | 0.52 |
Since 2015, Boston’s breakeven horizon has decreased by nearly six months. That’s the seventh biggest decrease in the nation, and a reflection of the market’s runaway home prices (caused by a significant inventory shortage). It is making buying a more enticing option, but only for the people who can both find a home and afford it.