By Nora Tooher
It will take a little longer in the Philadelphia metro area this year than in the past for buying to make a better financial deal than renting for many prospective home buyers.
In the Philadelphia metro, the breakeven horizon — the time it takes before owning a home makes more financial sense than renting the same home — was 2.8 years at the end of 2015, up from 2.4 years at the end of 2014, according to new research from Zillow.
As of the end of the fourth quarter of 2015, the median home value in the Philadelphia-Camden-Wilmington metropolitan area was $200,294. Area home values are expected to increase 1.17 percent over the next year. The metro area’s median rent at the end of 2015 was $1,595.
The breakeven horizon is even longer for home buyers in other parts of the Northeast, such as Boston and New York, where the breakeven horizon is just over three years. In Washington D.C., buyers have to stay in a home for 4.5 years before buying the same home makes more financial sense.
Nationwide, the breakeven horizon was 1.9 years at the end of 2015, unchanged from the same period a year earlier.
According to Zillow’s experts, rents are flattening across the country and are expected to continue to stabilize, which could make the breakeven horizon even longer as home values continue to climb. Also, condominiums — a common choice for young homebuyers, especially in urban areas — typically have a longer breakeven horizon because of the additional costs of condo association fees.
There are some metro markets, however, where it only takes a little more than a year for owning a home to make more financial sense than renting the same home. Renters in Dallas, for example, only have to wait a year and three months before buying the home they’re renting is more financially advantageous.