Despite record low mortgage rates and an apparent bottoming in home prices, Americans have increasingly opted to rent than buy their homes as the economic recovery remains anemic and uncertain.
We drew on Zillow's newest metric – the breakeven horizon – to identify 7 housing markets where it's better to rent a home than buy one.
The breakeven horizon refers to the number of years after which buying a home is more "financially advantageous" than renting one. So, with a longer breakeven horizon it makes more sense to rent.
Unlike the price-to-rent ratio this metric includes a whole range of possible costs including mortgage payments, property taxes, utilities costs etc.
Note: The list is drawn for the 30 largest metro areas. Median list and rent price are for June 2012.
Thinkstock1. San Diego, California
Price-to-rent ratio: 14.0
Median list price: $369,000
Median rent price: $1,750
2. Seattle, WashingtonBreakeven horizon: 4.0 years
Price-to-rent ratio: 13.4
Median list price: $290,000
Median rent price: $1,270
Thinkstock3. Boston, MassachusettsBreakeven horizon: 4.3 years
Price-to-rent ratio: 13.4
Median list price: $347,900
Median rent price: $2,000
Thinkstock4. Los Angeles, CaliforniaBreakeven horizon: 4.3 years
Price-to-rent ratio: 14.2
Median list price: $399,000
Median rent price: $1,850
Thinkstock5. New York, New YorkBreakeven horizon: 5.1 years
Price-to-rent ratio: 12.8
Median list price: $389,000
Median rent price: $2,600
Thinkstock6. San Francisco, CaliforniaBreakeven horizon: 5.9 years
Price-to-rent ratio: 16.0
Median list price: $519,000
Median rent price: $1,960
Thinkstock7. San Jose, CaliforniaBreakeven horizon: 8.3 years
Price-to-rent ratio: 18.9
Median list price: $590,000
Median rent price: $2,050
Source: Zillow
