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How Long Until Chicagoland Homebuyers Break Even on Their Purchase?

by Peter Thomas Ricci

Homebuyers in Chicagoland break even on their homes sooner than expected

first-time-buyers-nar-profile-buyers-sellers

It takes just over two years for homebuying to make more financial sense than renting in Chicagoland’s housing market, according to a recent analysis from Zillow.

The “Breakeven Horizon,” as Zillow calls the measurement, looks at how long it takes before owning a home is more financially advantageous than renting, assuming the homebuyer secures a 30-year mortgage at today’s historically low interest rates.

At 2.1 years, Chicago’s break-even point was slightly higher than the national average of 1.9 years, but was still ahead of markets such as San Francisco and Los Angeles, where the Breakeven Horizons are not until 2.9 and 4.1 years, respectively.

Here is a chart that better demonstrates how Chicagoland compares with the rest of the nation’s large metro areas:

Metro Area Q4 2015 Breakeven Point (Years) Median Rent
U.S. Average 1.9 $1,381
Atlanta 1.4 $1,274
Boston 3.1 $2,247
Chicago 2.1 $1,633
Houston 1.5 $1,579
Los Angeles 4.1 $2,491
Miami 2.5 $1,822
New York 3.1 $2,384
Philadelphia 2.8 $1,558
Phoenix 2.3 $1,249
San Francisco 2.9 $3,338
Seattle 1.9 $1,931

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Comments

  • Bob Avellini says:

    Completely untrue information for the state of Illinois. High taxes, lack of appreciation and a shortage of qualified buyers contribute to the advantages of renting over buying. By the way, I am a licensed Illinois real estate broker.

  • Eli Masud says:

    I agree and disagree Bob. Taxes are high, yes but properties are absolutely being sold for more due to the shortage in inventory. I’m not sure what market you work in but we primarily work around downtown Chicago. With the limited inventory and extremely low average days on market there are obviously qualified buyers out there able to purchase or these properties wouldn’t be going left and right–again probably depends on the price point and quality of homes we’re talking about. Last, I can’t remember the last deal I did with an unqualified buyer. I believe a lot of this is dependent on the source of your clients (when they’re buyers) and on the listing side asking the broker to provide you with the pre-approval prior to showing the properties. No, that doesn’t guarantee that they’re qualified but it sure does help weed out those kicking tires and those serious about purchasing.

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