By: Paul Tooher
Planning to spend just a short time living in Chicagoland? You’re financially better off renting rather than buying a house.
That’s according to Zillow’s most recent breakeven horizon, which estimates the number of years you would have to live in a home before buying it would become more financially advantageous than renting it.
A buyer in the Chicago metro area, which includes DeKalb, would need to live in their home for 2.1 years before it became financially advantageous to buy rather than rent.
Someone buying a home in Washington, D.C., on the other hand, where the median home value is $366,371 and the median rent is $2,150 per month, would have to live in their home for 4.5 years before reaching the breakeven point.
Nationwide, the breakeven horizon on a median-valued home is currently 1.9 years, and remains unchanged since the end of 2014.
In the Chicago metro area, Zillow expects home prices to increase 2.2 percent over the next year, while rents are expected to rise by 3.65 percent. Zillow puts the median home value in Chicagoland at $193,800, compared to a median rent of $1,649 a month.
In DeKalb, Zillow reports that the median home value is $132,700, which is expected to rise 2 percent over the next year. The median rent price in DeKalb is $1,306.
In general, buying versus renting makes sense if you plan to live in a home for an extended period. Buying a house can require large upfront costs, such as a down payment and closing costs, and then there’s taxes and maintenance to consider, too.
But over time, in a healthy housing market, the value of a home will appreciate so that the owner can recoup the investment and possibly even make a profit. However, it takes time for home values to appreciate, which is why knowing how long you plan to live in one place is so crucial in making the right decision.