There are costs associated with buying a home, meaning you can’t sell it the next day without losing money. Even in the hottest markets it takes some time for a home to appreciate enough that you could at least break even when you sell.
Obviously, your can reach the break-even point faster in some housing markets than others. Zillow has analyzed the nation’s top housing markets and found San Antonio and Nashville are the two markets where a buyer can do best.
Each quarter Zillow looks at how long home buyers need to stay in a home before buying makes more financial sense than renting. The national break-even point is less than two years, thanks to strong job growth in major U.S. cities. Zillow says owning is more affordable than renting in 34 of the 35 largest metros.
But it’s still not easy to come up with a down payment, especially as rents continue to rise across the country. Zillow combined its Breakeven Horizon with job market and income information to find places where homeownership is not just financially advantageous but also more likely to be financially possible.
Sweet spot for homeowners
In San Antonio, homeowners can expect to break even on a home purchase in one year and four months. Zillow calls San Antonio a “sweet spot” for homeowners, thanks to incomes that are appreciating an average of 4% per year and job growth that is about 3% above the national average.
Nashville is close behind, with a break-even point of one year and five months. It enjoys similar economic conditions to San Antonio. Other markets with a short break even point are Memphis, Tampa, Atlanta and Seattle.
“All places on this list are great for those looking to buy a home and settle down,” said Zillow Chief Economist Dr. Svenja Gudell. “Not only do they have a strong labor market, but a home purchase in these markets makes a lot of financial sense.”
But Gudell urges caution, since buyers need to have an adequate down payment and be able to qualify for a mortgage. Most important, she says you have to be able to find a home in your price range, and be prepared for a bidding war.