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San Antonio and Nashville Named Sweet Spots for Homeownership

A strong labor market and short Breakeven Horizon make San Antonio an optimal place for homeownership.

- Zillow's sweet spot analysis found places where employment and income growth are on the rise, and where you can break even on a home purchase in the shortest amount of time.

- The U.S. Breakeven Horizon is one year and eight months, which is the number of years home buyers need to own a home to make buying it more financially advantageous than renting it.

- Long Breakeven Horizons in Silicon Valley are driving major tech towns down Zillow's list of homeownership sweet spots despite their hot job markets. The Breakeven Horizon in San Jose is more than three years.

Jun 15, 2016

SEATTLE, June 15, 2016 /PRNewswire/ -- San Antonio is the sweet spot for homeownership, according to Zillow's latest analysis. San Antonio is a market with strong income growth, a growing job market, and a place where you can break even on a home purchase in just over a year.

The Zillow® Breakeven Horizoni, released quarterly, looks at how long home buyers need to stay in a home before buying it makes more financial sense than renting it. The national Breakeven Horizon is less than two years, and owning is more affordableii than renting in 34 of the 35 largest metros. But it's still difficult to afford a down payment, especially as rents continue to rise across the country. Zillow combined the 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.

In San Antonio, homeowners can expect to break even on a home purchase in one year and four months. Incomes have appreciated an average of 4 percent over the past year and employment growth has hit almost 3 percentiii, both more than the national average, making San Antonio a sweet spot for homeownership.

Long Breakeven Horizons are pushing Silicon Valley hot-spots down the list, despite relatively strong labor markets. In San Jose, homeowners need to stay in their home for more than three years to make buying it more financially advantageous than renting it. San Jose would move up 20 spots on the list if the Breakeven Horizon were the same as Seattle, at under two years.

Zillow's Top 10 Sweet Spots for Homeownership

Ranking

Metropolitan Area

Q1 2016 Breakeven Horizon

Income Growth

Employment Growth

1

San Antonio

1 year 4 months

4.1%

2.8%

2

Nashville, Tenn.

1 year 5 months

1.8%

3.7%

3

Tampa, Fla.

1 year 7 months

3.3%

3.3%

4

Jacksonville, Fla.

2 years

5.5%

3.8%

5

Raleigh, N.C.

1 year 8 months

2.1%

4.0%

6

Charlotte, N.C.

1 year 7 months

5.1%

2.6%

7

Columbus, Ohio

1 year 7 months

6.1%

2.3%

8

Atlanta

1 year 4 months

0.5%

3.1%

9

Seattle

1 year 7 months

1.6%

3.2%

10

Memphis, Tenn.

1 year

1.4%

1.8%

"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. Be careful, though, because this assumes you can qualify for a mortgage, have a down-payment saved up and, most importantly, can find a home for sale in your price range. Simply put, buying a home in many of these markets is not for the faint of heart."

The labor market is looking especially strong in Raleigh and Columbus -- employment is up about 4 percent in Raleigh. In Columbus, incomes are appreciating just over 6 percent, more than double that of the nation, where incomes have appreciated about 2 percent over the past year.

Metropolitan Area

Q1 2016 Breakeven Horizon

Income Growth

Employment Growth

April 2016 Zillow Home Value Indexiv (ZHVI)

ZHVI YoY Forecast

April 2016 Zillow Rent Indexv (ZRI)

ZRI YoY Change

United States

1 year 8 months

2.3%

2.0%

$   187,000

2.4%

$       1,403

3.2%

New York/Northern New Jersey

2  years 10 months

0.2%

2.1%

$   385,800

1.2%

$       2,422

3.9%

Los Angeles-Long Beach-Anaheim, CA

3 years 6 months

-0.3%

2.5%

$   567,700

1.5%

$       2,544

4.2%

Chicago, IL

2 years

0.0%

1.7%

$   196,200

2.2%

$       1,650

1.5%

Dallas-Fort Worth, TX

1 year 3 months

-5.5%

3.6%

$   183,700

5.0%

$       1,527

4.7%

Philadelphia, PA

2 years 5 months

3.3%

2.3%

$   206,100

2.1%

$       1,568

2.4%

Houston, TX

1 year 5 months

-0.4%

0.4%

$   173,300

3.4%

$       1,586

3.7%

Washington, DC

3 years 7 months

-3.6%

2.4%

$   363,600

1.0%

$       2,121

1.1%

Miami-Fort Lauderdale, FL

2 years 5 months

0.2%

2.7%

$   232,800

0.3%

$       1,868

5.4%

Atlanta, GA

1 year 4 months

0.5%

3.1%

$   164,000

4.0%

$       1,300

4.5%

Boston, MA

2 years 9 months

3.5%

1.6%

$   390,300

1.2%

$       2,273

5.3%

San Francisco, CA

2 years 11 months

-0.4%

3.5%

$   806,800

1.5%

$       3,364

9.0%

Detroit, MI

1 year 6 months

-0.1%

2.1%

$   124,200

3.4%

$       1,171

3.6%

Riverside, CA

1 year 8 months

-1.4%

3.4%

$   307,300

5.9%

$       1,722

4.2%

Phoenix, AZ

2 years 3 months

1.6%

3.5%

$   220,600

3.2%

$       1,284

4.8%

Seattle, WA

1 year 7 months

1.6%

3.2%

$   386,300

5.9%

$       1,985

8.5%

Minneapolis-St Paul, MN

2 years 1 month

0.6%

1.8%

$   222,000

2.0%

$       1,528

3.2%

San Diego, CA

3 years 7 months

1.3%

2.8%

$   507,100

1.3%

$       2,383

4.4%

St. Louis, MO

1 year 8 months

-4.3%

1.6%

$   142,900

3.4%

$       1,141

2.1%

Tampa, FL

1 year 7 months

3.3%

3.3%

$   165,600

2.8%

$       1,320

4.3%

Baltimore, MD

2 years 6 months

0.4%

2.0%

$   246,000

1.1%

$       1,731

1.5%

Denver, CO

1 year 8 months

0.8%

2.8%

$   336,600

4.6%

$       1,991

7.3%

Pittsburgh, PA

1 year 7 months

-2.2%

0.2%

$   127,200

1.9%

$       1,125

6.6%

Portland, OR

1 year 10 months

3.0%

3.2%

$   325,400

4.5%

$       1,739

9.6%

Charlotte, NC

1 year 7 months

5.1%

2.6%

$   161,100

3.3%

$       1,244

3.2%

Sacramento, CA

2 years 1 month

-0.2%

2.7%

$   339,600

3.7%

$       1,648

5.7%

San Antonio, TX

1 year 4 months

4.1%

2.8%

$   151,500

4.3%

$       1,311

2.4%

Orlando, FL

1 year 8 months

0.1%

4.5%

$   185,100

3.2%

$       1,360

4.2%

Cincinnati, OH

1 year 6 months

2.0%

1.6%

$   143,400

2.4%

$       1,237

1.8%

Cleveland, OH

1 year 4 months

0.5%

1.0%

$   126,500

2.6%

$       1,134

0.5%

Kansas City, MO

1 year 5 months

-1.6%

1.6%

$   148,100

3.7%

$       1,242

5.1%

Las Vegas, NV

1 year 9 months

1.7%

2.5%

$   203,700

5.0%

$       1,236

3.6%

Columbus, OH

1 year 7 months

6.1%

2.3%

$   155,700

3.0%

$       1,284

3.2%

Indianapolis, IN

1 year 2 months

-0.3%

2.1%

$   130,200

3.9%

$       1,190

0.7%

San Jose, CA

3 years 4 months

-1.8%

3.9%

$   962,400

2.5%

$       3,503

8.1%

Austin, TX

1 year 10 months

-2.1%

4.4%

$   250,400

4.3%

$       1,704

2.8%

Zillow
Zillow® is the leading real estate and rental marketplace dedicated to empowering consumers with data, inspiration and knowledge around the place they call home, and connecting them with the best local professionals who can help. In addition, Zillow operates an industry-leading economics and analytics bureau led by Zillow's Chief Economist Dr. Svenja Gudell. Dr. Gudell and her team of economists and data analysts produce extensive housing data and research covering more than 450 markets at Zillow Real Estate Research. Zillow also sponsors the quarterly Zillow Home Price Expectations Survey, which asks more than 100 leading economists, real estate experts and investment and market strategists to predict the path of the Zillow Home Value Index over the next five years. Zillow also sponsors the bi-annual Zillow Housing Confidence Index (ZHCI) which measures consumer confidence in local housing markets, both currently and over time. Launched in 2006, Zillow is owned and operated by Zillow Group (NASDAQ:Z and ZG), and headquartered in Seattle.

Zillow is a registered trademark of Zillow, Inc.




i The breakeven horizon is the number of years after which buying is more financially advantageous than renting (at the precise breakeven horizon one can be indifferent between buying and renting). We computed the breakeven horizon for each household by comparing the costs of owning a home versus renting a home at the end of each year for 30 years (assuming the house is purchased using a 30 year fixed mortgage). Our buy versus rent analysis incorporated all possible costs incurred when purchasing a home as well as those incurred when renting a home to make the comparison between these costs as realistic as possible. The full methodology can be found here: http://www.zillow.com/research/rent-vs-buy-breakeven-horizon-analysis-methodology-updated-3549/

ii Zillow determined affordability by analyzing the current percentage of a metro area's median income needed to afford the rent or the monthly mortgage payment on a median-priced home or apartment, and compared it to the share of income needed in the pre-bubble years between 1985 and 1999. For mortgage affordability, Zillow assumed a 20 percent down payment and a 30-year, fixed-rate mortgage at prevailing mortgage rates pulled from the Freddie Mac Primary Mortgage Market Survey. If the share of monthly income currently needed to afford the median-priced home or apartment is greater than it was during the pre-bubble years, that area is considered unaffordable for typical buyers or renters.

iii Labor data used in this analysis is from the Bureau of Labor Statistics, Current Employment Statistics. Both the employment growth and income growth data are 3-month trailing averages of the annual growth rate of total nonfarm employment and average weekly earnings for the year ending April 2016.

iv The Zillow Home Value Index (ZHVI) is the median estimated home value for a given geographic area on a given day and includes the value of all single-family residences, condominiums and cooperatives, regardless of whether they sold within a given period. It is expressed in dollars, and seasonally adjusted.

v The Zillow Rent Index (ZRI) is the median Rent Zestimate® (estimated monthly rental price) for a given geographic area on a given day, and includes the value of all single-family residences, condominiums, cooperatives and apartments in Zillow's database, regardless of whether they are currently listed for rent. It is expressed in dollars.

 

SOURCE Zillow

For further information: Jordyn Lee, Zillow, press@zillow.com