Blog

<< back to all

Buy vs. Rent


Many people have asked us, "should I consider buying a home or just stick with renting?" There are some pretty strong numbers that suggest buying a home is a far better financial decision.  First, it is important to familiarize yourself with the "breakeven" point; you hit the breakeven point when the amount of money you invest in your new home is the same as what you would have spent renting. Colorado's breakeven point is just over (2) years. After you reach this point, you will be spending less on your mortgage then you would if you were renting that same home. Not only are you building equity in your first (2) years as a homeowner, but after your breakeven point you continue to build equity and are saving money every month. Keep in mind, the price and area in which you purchase your home will affect your "breakeven" point. 

Here are some other "breakeven" points all across the US:

  • Nationwide Breakeven Point: 1.96 years
  • Los Angeles - 3.7 years
  • Memphis -1.32 years
  • Philadelphia - 2.9 years
  • New York - 5.2 years
  • Phoenix - 2.1 years

Zillow estimates a unique Breakeven Horizon for up to 3,000 individual homes pulled randomly from various ZIP codes. They then use the Zestimate (Property value estimated by Zillow) and Rental Zestimate on the same houses, therefore we’re able to consider the costs of buying a house against the costs of renting that same house.

The following are criteria Zillow uses to pull specific Breakeven Horizons for different zip codes:

  • A 20% down payment
  • Monthly payments on a 30-year fixed rate mortgage at the current interest rate for people with credit ratings between 680 and 740
  • Property taxes
  • Homeowner’s insurance
  • 3% of purchase costs
  • 8% selling costs (because that’s how owners realize the gains)
  • Annual maintenance costs equal to 1% of the home’s value
  • For condos, 1.2% a year in HOA fees
  • Home appreciation forecasts
  • Federal tax deductions

For renting Zillow assumes:

  • A deposit equal to one month’s rent
  • Rent payments
  • Renter’s insurance
  • 5% annual investment gains on money that would have been used as a down payment or gone towards other homeowner expenses the renter avoids

 

So if you have been considering buying a home and have had some reservations, these facts don't lie and now is the time to buy!

 

Information provided by The Denver Channel, See Link Below:

https://www.thedenverchannel.com/lifestyle/real-estate/should-you-rent-or-buy-a-home-in-denver- By Lindsey Scholl - Mar 19, 2019

Recent Posts

5 DIY Projects That Add Value to Your Home

The History of Friday the 13th

Home Security & Smart Devices

Team Vivi's 3 Favorite Neighborhoods in Denver

4 DIA Conspiracy Theories

Simple Hacks For Winterizing Your Home

Marketplace Health Care Premiums to Lower by 18% in Colorado Next Year

DIA Great Hall Contractor Issued 2 Breach of Contract Notices

Watch The Broncos Practice, For FREE

The Science Behind Self Motivation

5 Interior Design Tips for Your Home

To Video or Not to Video

U.S. Migration: Where is Everyone Going?

Yes or No on Question 200?

The History of Father's Day

6 Low Cost and FREE Summer Programs For Kids in the Denver Area

Successful Thinking

4 Simple Tips For Creating Your Perfect Backyard

10 Colorado Programs For "First Time Home Buyers"

Denver Home Prices Hold Steady, Inventory Significantly Increases

7 Tips for Selecting the Right Real Estate Agent

6 Ways to Make Your Home Greener!

Alert! New LOWER Mortgage Rates!

13 Mistakes to Avoid with Real Estate Listing Photos

13 Things Mentally Strong People Don’t Do

Buy vs. Rent

Support Local Lemonade Stands

Are you ready to move?

The Listing Process

The Buying Process

Airbnb: A Great Way to Earn a Supplemental Income in Colorado!

Housing Market in Denver in 2019

5 Quick and Easy Tips to Help You Clean Your Home

5 Remodeling Tips for Small Budgets

Ski for Free!!

5 New Skyscrapers in Construction in Denver

The Perfect Morning Routine for Successful People

4 Smart Home Devices

5 Reasons to Buy A Home This Winter

8 Backyard Ideas for Dog Owners

First Time Home Buyers: How are the Millennials Doing?

Is Colorado Heading for a Recession?

Social Media Marketing for Real Estate: 5 Tips

What Are the Prices of Denver's Neighborhoods?

Why Top Firms are Boosting their Denver Presence? Find the Greatest Job in Colorado!

Christmas in Colorado's Mountains!

Mortgage Rates

What Happens When You Overprice Your Home?

Should I Buy a House Now?

The Team Concept - Why is it better for you?

9 Seller Tips

9 Buyer Tips

It's Still a Great Time to Buy a Home in Colorado!

Breckenridge and Keystone Opens Early for the 2018-19 Winter Season

Why the Real Estate market will remain strong

Denvernomics October 2018

Electronics Recycling Collection Event

Home buyers: Denver is one of the best markets!

What options are available for financing your home purchase?

10/18/17 – Weekly Denver Real Estate Update with Team Vivi

Denver’s Apartment-Building Boom Gives Renters a Break

9/20/17 – Weekly Denver Real Estate Update with Team Vivi

9/13/17 – Weekly Denver Real Estate Update with Team Vivi

9/6/17 – Weekly Denver Real Estate Update with Team Vivi

20 Tips for Preparing Your House for Sale (INFOGRAPHIC)

Why mortgages, other interest rates could go up faster than you think…

All this talk about a bubble, but…

U.S. home-price appreciation continues to advance

Denver Metro Area’s Top 100 residential real estate agents!