Zillow Surveys Financials of Buying Vs. Renting In Twin Cities
A new study from Seattle-based Zillow Inc. calculates the “break-even horizon” for the average Twin Cities homebuyer at 2.2 years. Zillow’s analysis compares the cost of buying a home versus the cost of renting an apartment to estimate the point at which it makes financial sense to buy a home rather than rent an apartment.
In data compiled for February 2015, Zillow calculated the median home price in the Twin Cities at $211,400 and the median apartment rent at $1,506 per month.
According to Zillow’s analysis, the break-even point for Twin Cities buyers is slightly longer than the current national average of 1.9 years.
But a closer look at Zillow’s numbers shows that the break-even timeline grows longer in pricier areas and shorter in economically challenged neighborhoods where homes are cheaper.
Per Zillow’s neighborhood-by-neighborhood analysis, the break-even horizon in Kenwood, an affluent area of south Minneapolis, is eight years. But in the Jordan neighborhood of North Minneapolis, it’s just one year.
But even with historically low mortgage rates, not everyone is a candidate to buy a home. Zillow’s survey found that 16 percent of renters say that they can’t qualify for a home loan, 18 percent say they can’t afford the taxes, maintenance and related costs of homeownership, and 13 percent say they don’t have enough savings for a down payment.
Zillow, founded in 2006, is a popular online service listing homes for sale and units for rent across the U.S. The company, which began with for-sale home listings, added rental units in 2009.