Zillow report: Homeownership may not beat renting for decades in high-cost markets

A report from Zillow indicates that for many U.S. households, the financial advantage of buying a home over renting may not be realized for decades. The study calculated the time required for a household saving 10 percent of the median local income to reach a 20 percent down payment and subsequently reach a break-even point where the cumulative cost of ownership falls below the cost of renting a similar property.

Nationally, the average household reaches this break-even point after approximately 15 years, consisting of 8.5 years of saving and 6.2 years of ownership. While starter homes offer a shorter timeline of roughly 7.2 years, high-cost markets present significant challenges. In San Diego, the timeline extends to nearly 50 years, the longest in the country. Other cities with break-even periods exceeding 27 years include Boston, New York City, and Seattle.

Zillow senior economist Kara Ng noted that while homeownership offers equity and stability, the reality of the financial transition is nuanced. She advised potential buyers to consider how long they intend to stay in a location before deciding if purchasing makes more financial sense than renting.