Zillow report proves the “renting vs. buying” debate isn’t simple
Buying or renting is largely a lifestyle decision, the report says, with homeownership never making financial sense in some markets.
To buy or not to buy? That’s the question behind Zillow’s latest affordability report.
The portal found that buying is a better deal than renting under certain circumstances: When a homebuyer plans to own their property for at least six years, long-term stability and equity are more important than flexibility. This is especially true when their market has a short breakeven horizon, the term used to describe when a buyer financially breaks even on the rental price.
The national breakeven horizon is six yearsdown from its peak of 8.4 years in October 2023. The horizon assumes a homebuyer has a 30-year fixed-rate mortgage and assumes all costs associated with homeownership, including mortgage payments, property taxes, insurance, maintenance and closing costs.
For renters, the horizon includes monthly rent and renter’s insurance, plus returns on cash not spent on a down payment.
Orphe Divounguy
“For generations, Americans have been told that buying a home is the smartest financial move they will ever make. This analysis shows that the truth is more complicated,” Zillow Senior Economist Orphe Divounguy said in the report. “This research shows that both renting and buying can be smart decisions, just in different cities.”
Regionally, the Midwest and South offer the shortest breakeven timelines.
Columbus, Ohio, has the shortest breakeven horizon at four years, along with Memphis, Tennessee; Buffalo, New York; Indianapolis; Cincinnati; and Louisville, Kentucky, not far behind at less than five years.
“In these markets, the relationship between house prices and rental prices is relatively balanced,” the report explains. “The monthly cost of owning isn’t dramatically higher than that of renting, so buyers don’t have to dig a big financial hole up front. Add to that steady appreciation and you have a market where ownership quickly starts to pay for itself.”
Meanwhile, it makes more financial sense to rent on the coasts and in some of the larger markets in the South, with the typical buyer never reaching the breakeven horizon – even after 30 years.
In San Francisco; San Jose, California; and New Orleans, renters always have the financial advantage. In Seattle; Austin, TX; Los Angeles; San Diego; and Portland, Oregon, buyers can break even, but only after 16 to 23 years.
“The one thing these markets have in common is a large gap between what it costs to own and what it costs to rent,” the report said. “That gap could be the result of high home prices, high insurance premiums, or weak home value appreciation, and may never close, even after decades.”
Amanda Pendleton, a housing trends expert for Divounguy and Zillow, said the report’s conclusion should not be that households in the Midwest and South should rush to buy a home, or that households along the coasts should wave the white flag on buying.
The decision, they said, should take into account lifestyle preferences and be approached with thoughtful planning, such as potentially lowering the down payment and investing the remaining money, to put a household in the best possible position for the future.
“The decision of renting versus buying in 2026 is as much a lifestyle decision as it is a financial decision,” Pendleton said. “Do you want a backyard and a menagerie of pets? Or do you want to skip the yard work altogether and have the flexibility to move on a whim? These types of lifestyle questions are just as important as whether or not the math works in your favor.”
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