Buying a home in the Chicago area makes more sense than renting if you plan to own the property for more than 2.3 years, and it’s a smarter move today than it was last year, according to an analysis by real estate website Zillow Inc.
Seattle-based Zillow determined that homeowners here “break even” on their investment compared with renting after 2.3 years, a calculation that factors in closing costs, interest rates and projected future home price and rent changes.
That’s slightly higher than the national breakeven point of 2.1 years and higher than 21 of the 35 largest U.S. metropolitan areas.
The Chicago breakeven point also has fallen since the first quarter of last year, when it was 2.8 years. The national breakeven point was 3.1 years back then.
“Rents keep rising, and mortgage interest rates remain very low, which is helping to skew the rent vs. buy decision toward buying for those who can afford it,” Zillow Chief Economist Stan Humphries said in a statement.
Here’s how homes in Chicago compare to those in other big metropolitan areas, based on date from the first quarter of this year:
• New York: 2.7 years
• Los Angeles: 2.4 years
• Chicago: 2.3 years
• Dallas: 1.4 years
• Houston: 1.5 years
• Philadelphia: 2.9 years
• Washington, D.C.: 4.2 years
• Miami: 1.2 years
• Atlanta: 1.4 years
• Boston: 4.0 years
(Source: Crain’s Chicago Business)