Hot Job Markets Driving Down Homeownership ‘Sweet Spot’

The “sweet spot”–that tipping point where you can break even on a home purchase in the shortest time–varies across the U.S., but apparently is sweetest in San Antonio.

Zillow Inc., Seattle, released its quarterly Breakeven Horizon, which measures how long home buyers need to stay in a home before buying it makes more financial sense than renting it. The national Breakeven Horizon is one year, eight months; for San Antonio, it’s just one year, four months.

“San Antonio is a market with strong income growth, a growing job market and a place where you can break even on a home purchase in just over a year,” the report said. It noted in San Antonio, incomes have appreciated an average of 4 percent over the past year and employment growth has hit nearly 3 percent, both higher than the national average.

The Zillow analysis of the country’s 35 largest metro areas found owning is more affordable than renting in 34 metros. Long Breakeven Horizons pushed Silicon Valley hot-spots down the list, despite relatively strong labor markets. The analysis noted San Jose homeowners need to stay in their home for more than three years to make buying it more financially advantageous than renting it.

Following San Antonio, the report’s top 10 Sweet Spots included Nashville, Tenn. (one year five months); Tampa (one year seven months); Jacksonville (two years); Raleigh, N.C. (one year eight months); Charlotte (one year seven months); Columbus, Ohio (one year seven months); Atlanta (one year four months), Seattle (one year seven months) and Memphis, Tenn. (one year).

“All places on this list are great for those looking to buy a home and settle down,” said Zillow Chief Economist Svenja Gudell. “Not only do they have a strong labor market, but a home purchase in these markets makes a lot of financial sense.

The report said the labor market looks especially strong in Raleigh and Columbus, with employment is up nearly 4 percent in Raleigh. In Columbus, incomes are appreciating just over 6 percent, more than double that of the nation, where incomes have appreciated by 2 percent over the past year.