According to the report, the decision to buy or rent is largely a lifestyle decision, and in some markets, homeownership simply doesn’t make economic sense.
Should I buy it or not? That’s the question behind Zillow’s latest affordability report.
The portal has found that buying is more advantageous than renting in certain situations. If a homebuyer plans to own a property for at least six years, stability and long-term equity are more important than flexibility. This is especially true when the market has a short break-even period. Break-even is a term used to describe the financial point at which a buyer can break even compared to renting.
The national break-even period will be six years, down from a peak of 8.4 years in October 2023. Horizon assumes that homebuyers are taking out a 30-year fixed-rate mortgage and are responsible for all costs associated with homeownership, including mortgage payments, property taxes, insurance, maintenance, and closing costs.
For renters, that includes monthly rent and renters insurance, plus any cash proceeds not spent on the down payment.
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“For generations, Americans have been told that buying a home is the smartest financial move they’ll ever make. This analysis reveals the truth is more complex,” Zillow senior economist Orfe Divongay said in the report. “This study shows that renting and buying can be smart decisions, just in different cities.”
Regionally, the Midwest and South have the shortest breakeven timelines.
Columbus, Ohio, tied with Memphis, Tennessee, for the shortest break-even point at four years. Buffalo, New York. Indianapolis; Cincinnati; and Louisville, Kentucky, are not far behind with less than five years.
“In these markets, the relationship between house prices and rents is relatively balanced,” the report explains. “The monthly costs of owning aren’t dramatically higher than renting, so buyers don’t have to dig a huge financial hole to begin with. Add in the steady rise in home values, and you have a market where ownership can start paying dividends right away.”
On the other hand, the typical buyer won’t reach a break-even level after 30 years, so it makes more economic sense to rent in some of the larger markets on the coast and in the South.
In San Francisco. San Jose, California. And in New Orleans, renters always have an economic advantage. In Seattle. Austin, Texas. Buyers in Los Angeles; San Diego; and Portland, Oregon will break even, but only after 16 to 23 years.
“One thing these markets have in common is a wide disparity between the cost of owning and the cost of renting,” the report said. “This gap may result from higher home prices, higher insurance premiums, slower home value growth, etc., and may not close for decades.”
Amanda Pendleton, a housing trends expert at Devonggai and Zillow, said the takeaway from the report is not that households in the Midwest or South should rush to buy homes, or that households along the coasts should wave the white flag.
They said this decision should be approached with thoughtful planning, taking into account lifestyle preferences and putting the household in the best possible position for the future, including reducing the down payment and investing the remaining funds.
“The decision to rent or buy in 2026 is as much a lifestyle decision as it is a financial one,” Pendleton said. “Do you want a backyard garden and pets? Or do you want to skip yard work altogether and have the flexibility to move on a whim? These types of lifestyle questions are just as important as whether the math works in your favor.”
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