Rent or buy? Choosing when, when and where to buy a home is among the biggest financial decisions most people make throughout their lives. While home ownership is the traditional way many families grow and pass on wealth, the post-pandemic surge in prices in markets across the country has Americans questioning whether buying is the right option for them.
A new study from Zillow finds that these tough questions have equally varied answers. While homeowners tend to come out ahead financially compared to renters, the universal assumption that buying is better isn’t true everywhere — especially in expensive housing markets.
Zillow based its analysis on April 2026 data, using an average single-family home price of $368,720 and an average monthly rent of about $1,951 per month. The analysis assumes that the buyer takes out a 30-year fixed rate loan at a rate of approximately 6.2%.
Nationwide, the “breakeven point” where ownership is financially beneficial to rent is about six years. That may seem like a long time, but it’s down from the October 2023 peak of 8.4 years.
But across the country, there are huge statistical differences. Among the 50 largest metropolitan areas analyzed by Zillow, the place where buyers get the fastest returns is Columbus, Ohio, where it takes just over four years to break even.
Areas where buyers with a 20% down payment break down compared to renters in less than five years include:
- Columbus, Ohio4.1 years
- Memphis, Tennessee4.2 years
- Buffalo, New York4.2 years
- Indianapolis, Indiana4.3 years
- Cincinnati, Ohio4.6 years
- Louisville, Kentucky4.8 years
On the other hand, there are three cities where homeowners will never come out ahead, even with the full 30-year term of the mortgage, and another handful where it takes more than 15 years to reach the breaking point. (Of course, this assumes that current housing market conditions remain constant over the decades, which is not a guarantee.)
Here are the cities where employers came out on top:
- San Francisco: there is no point of separation after 30 years
- New Orleans: there is no point of separation after 30 years
- San Jose, California: there is no point of separation after 30 years
- Seattle: 19.7 years
- Los Angeles: 17.1 years
- San Diego, California: 23.3 years
- Austin, Texas: 18.4 years
- Portland, Oregon: 16.7 years
How to calculate the cost of renting versus owning
Zillow’s researchers note that comparing rents to yours isn’t as simple as comparing monthly payments. Buyers face higher upfront costs in the form of closing costs and lower down payments compared to renters.
The size of your down payment is also important. Putting down the traditional 20% of the home purchase price has both pros and cons. While a down payment is more financially beneficial in the long run, it “is not always the fastest way to get a breakup,” the researchers wrote in their analysis.
A lower payment means a larger loan and more interest paid over time. In addition, lenders often require mortgage insurance for buyers with small down payments, which can increase your costs.
How long you plan to stay in the home is another big factor in calculating your lease versus your own. Buyers who expect to move in just a few years won’t own the home long enough to recoup their closing costs, let alone start building equity.
But it’s important to remember that home equity has an opportunity cost compared to cash. People may choose to rent or buy with a down payment because they prefer to be able to invest the remaining funds.
This point ties in with one last thing in Zillow’s calculations. They assume that renters take the amount of money they would need to pay the down payment and closing costs and invest it. Of course, a large – and growing, as housing prices have increased – the number of tenants did not become homeowners because they do not have the money to pay and closing costs.
So remember: If you’re a renter working hard on a landlord, it helps to have some hidden cash.
