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.
San Diego, California
Breakeven horizon:
3.6 years
Price-to-rent ratio:
14.0
Median list price:
$369,000
Median rent price:
$1,750
Source: Zillow
Seattle, Washington
Breakeven horizon:
4.0 years
Price-to-rent ratio:
13.4
Median list price:
$290,000
Median rent price:
$1,270
Source: Zillow
Boston, Massachusetts
Breakeven horizon:
4.3 years
Price-to-rent ratio:
13.4
Median list price:
$347,900
Median rent price:
$2,000
Source: Zillow
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