To buy or not to buy? That is the question behind Zillow’s latest affordability report.
The portal found that buying is a better deal than renting in certain circumstances: When a homebuyer plans to own their property for at least six years, stability and long-term equity are more important than flexibility. This is especially true when their market has a short breakeven horizon, the term used to describe when a buyer financially breaks even relative to renting.
The national breakeven horizon is six years, down from the October 2023 peak of 8.4 years. The horizon assumes a homebuyer has a 30-year fixed-rate mortgage and accounts for all the costs associated with homeownership, including mortgage payments, property taxes, insurance, maintenance and closing costs.
For renters, the horizon includes monthly rent and renters insurance, plus the return on cash that wasn’t spent on a down payment.
Orphe Divounguy
“For generations, Americans have been told that buying a home is the smartest financial move they’ll ever make. This analysis finds the truth is more complicated,” Zillow Senior Economist Orphe Divounguy said in the report. “This research shows that both renting and buying can be smart decisions, just in different cities.”
Regionally, the Midwest and the South offer the shortest breakeven timelines.
Columbus, Ohio, has the shortest breakeven horizon at four years, with Memphis, Tennessee; Buffalo, New York; Indianapolis; Cincinnati; and Louisville, Kentucky, not far behind at less than five years.
“In these markets, the relationship between home prices and rents is relatively balanced,” the report explained. “The monthly cost of owning isn’t dramatically higher than renting, so buyers don’t have a big financial hole to dig out of at the start. Add in steady home value appreciation, and you have a market where ownership starts paying off quickly.”
Meanwhile, it makes more financial sense to rent on the Coasts and some larger markets in the South, with the typical buyer never reaching the breakeven horizon — even after 30 years.
In San Francisco; San Jose, California; and New Orleans, renters always hold the financial advantage. In Seattle; Austin, Texas; Los Angeles; San Diego; and Portland, Oregon, buyers can break even, but only after 16–23 years.
“The one thing these markets have in common is a wide gap between what it costs to own and what it costs to rent,” the report read. “That gap can be the result of high home prices, high insurance premiums or weak home value appreciation, and it may never close, even after decades.”
Divounguy and Zillow home trends expert Amanda Pendleton said the takeaway from the report shouldn’t be that households in the Midwest and South should rush into buying a home, or that households along the coasts should wave the white flag on buying.
The decision, they said, should account for lifestyle preferences and be approached with thoughtful planning, such as potentially reducing the down payment and investing the remaining funds, to put a household in the best possible position for the future.
“The rent-versus-buy decision in 2026 is as much of a lifestyle decision as a financial one,” Pendleton said. “Do you want a backyard garden and a menagerie of pets? Or do you want to skip yard work entirely and have the flexibility to move on a whim? These types of lifestyle questions are as important as whether or not the math works in your favor.”
