In Most of U.S., Buying Beats Renting After Only Two Years

SEATTLE -- In half of U.S. metros, buying a home is a better financial decision than renting for home buyers who plan to stay in their home for at least two years, according to the first quarter Zillow® breakeven horizon analysis.

Among the 35 largest metro areas analyzed by Zillow in the first quarter, those with the shortest breakeven horizon were Riverside(less than 1 year), Orlando (1 year), Tampa (1.1 years) and Miami- Fort Lauderdale (1.2 years). Large metros with the longest breakeven horizon included Washington DC (4.2 years), Boston (4 years), Phoenix (3.3 years), San Diego (3.2 years), Minneapolisand Baltimore (both 3.1 years).

Because conditions for buyers and renters can vary dramatically even within cities themselves, Zillow produces breakeven horizons down to the neighborhood level in order to give potential buyers and renters the most insight into local conditions where they're considering living. For example, the breakeven horizon for the city of San Francisco is 2.8 years, but home shoppers who purchase in the Bayview neighborhood will break even after 1.4 years, while those who buy in Presidio Heights will need to stay in their home 11.7 years for buying to be a better financial decision.

"Rents keep rising, and mortgage interest rates remain very low, which is helping to skew the rent vs. buy decision toward buying for those who can afford it. Many renters may ask themselves why renew a lease, when you can break even on the same home in less time in many areas," said Zillow Chief Economist Dr. Stan Humphries. "However, some renters still have to overcome significant hurdles before they can pull the trigger on homeownership. For those renters who can't qualify for a mortgage or aren't able to save enough for a down payment on a house, renting can be a more flexible, and often far less frustrating option."

Zillow's breakeven horizon incorporates all costs associated with buying and renting, including upfront payments, closing costs, anticipated monthly rent and mortgage payments, insurance, taxes, utilities, maintenance, and renovation costs. We also consider the different asset streams available to buyers and renters. For buyers, the home equity grows. Alternatively, renters can invest some of the money they would spent on a home purchase and earn interest. It then factors in historic and anticipated home value appreciation rates, rental prices and rental appreciation rates.

To determine the breakeven horizon in your city or neighborhood, use our interactive tool on Zillow Research here.

Top 35 Metro Areas Covered By Zillow		ZIP code-level variance w/in larger metro (years)
Metro Name	Overall Metro Breakeven (Years)	Low	High
New York/Northern New Jersey	2.7	0.7	31
Los Angeles, CA	2.4	0.9	31
Chicago, IL	2.3	0.7	31
Dallas-Fort Worth, TX	1.4	0.5	19.2
Philadelphia, PA	2.9	0.5	8.9
Houston, TX	1.5	0.8	12.3
Washington, DC	4.2	1	11.5
Miami-Fort Lauderdale, FL	1.2	0.5	6.8
Atlanta, GA	1.4	0.4	3.5
Boston, MA	4.0	1.6	16.1
San Francisco, CA	2.6	0.7	10.8
Detroit, MI	1.5	0.6	6.8
Riverside, CA	0.9	0.6	7
Phoenix, AZ	3.3	0.9	8.6
Seattle, WA	1.9	1	15.7
Minneapolis-St Paul, MN	3.1	1.2	5.7
San Diego, CA	3.2	1.1	9.8
St. Louis, MO	2.1	0.6	6.3
Tampa, FL	1.1	0.5	4.4
Baltimore, MD	3.1	0.4	24.9
Denver, CO	2.6	1.2	4.5
Pittsburgh, PA	1.9	0.6	8.7
Portland, OR	2.2	1.2	4.5
Sacramento, CA	1.6	0.9	12.9
San Antonio, TX	1.8	1.4	4.8
Orlando, FL	1.0	0.5	2.4
Cincinnati, OH	2.2	0.7	4.5
Cleveland, OH	2.0	0.6	3.9
Kansas City, MO	2.2	0.7	4.8
Las Vegas, NV	1.5	0.7	5.6
San Jose, CA	2.8	1.4	6.3
Columbus, OH	2.5	0.8	3.6
Charlotte, NC	2.2	1	5.3
Indianapolis, IN	1.8	1	4
Austin, TX	2.1	0.9	4.6

Tips for Protecting Valuables from Floods

NEW YORK -- This spring, XL Group's Luxury Lines team is preparing clients to protect their valued possessions from the threat of spring showers and the flooding that may follow. 

According to Jennifer Schipf, Senior Underwriter in XL Group's Fine Art business, "The insurance market is paying closer attention to their clients' flood exposures.  In previous years, the market was providing broad coverage for the peril of flood with little to no deductibles.  After seeing losses from Superstorm Sandy and other storms, flood coverage is much more restricted in fine art and other policies so homeowners and collectors have to be wary that their high-value items are adequately protected."

"According to FloodSmart.gov, the website of the National Flood Insurance Program, a one inch flood in a 2,000 square feet home can result in $20,000 of loss, a 6 inch flood in the same space $39,000. And that does not take into account if a $100,000 painting that may have been stored in the basement or if the level of flood is significant, on the wall," said Ms. Schipf.  "Artwork is not the only valuable vulnerable to flood damage.  We've seen losses from flooding because everything from currency and securities to gold bullion was stored in subterranean vaults."

To help avoid flood damage or a loss in value of luxury items, XL Group's Luxury Lines team suggests taking some flood precautions:

• Know Your Value:  Unlike many items found in homes that depreciate, jewelry, fine art and other collectibles often do not.  "In fact, their value is more likely to grow," said Ms Schipf.  "An up-to-date appraisal can provide an accurate valuation that can help speed up the claims process.  And to get the best valuations, we encourage and can even help our clients find an appraiser who has expertise in their type of collection.
• Prepare Your Property:  According to Ms Schipf, XL's property risk engineers have lent some guidance to our gallery clients to see what precautions can be taken to minimized property damage.  Installing a sump pump or generator and changing on-site storage practices can do a lot in staving off flood damage.
• Have a Storage Plan:  According to Ms. Schipf, customers in coastal areas should consider reserving storage space ahead of the June 1 start of hurricane season.  The art community suffered considerable loss after floods hit Chelsea during Superstorm Sandy.  And many warehouses in Brooklyn where art was stored were equally unprepared for Sandy's storm surge," she said.  "Not only is it important to have a pre-arrange storage plan, it's also important to make sure your storage facilities is truly prepared to handle your artwork.  It should be climate-controlled and has camera monitoring, firewalls and floor drains, for instance. And stored artwork should certainly be kept off the floor."
• Take Cover: "Congress' recent passage of the Homeowner Flood Insurance Affordability Act, under the National Flood Insurance Program (NFIP) can only be increased a certain percentage," said Ms Schipf.  "Such coverage does not offer any more coverage and certainly doesn't protect high value items.   Specialty insurers provide standalone insurance protection to protect high-value collections including art, wine, coins or vintage cars, to name a few." 

Read more of Ms Schipf's thoughts on flood preparedness in "Water Damage" on XL Group's Fast Fast Forward.