WASHINGTON, DC — Zillow says the road to homeownership now takes far longer than it did before the pandemic. In a new analysis, the real estate company found that a median-income household setting aside 10% of income would need 8.5 years to save enough for a 20% down payment on a typical U.S. single-family home.
After that, Zillow says buyers would need another 6.2 years before owning becomes cheaper than renting. Put together, the company says the national timeline is just under 15 years, a reminder that the decision to buy now depends on more than list price and monthly payment alone.
What Zillow Measured
Zillow’s analysis breaks the decision into two parts: the time needed to build a down payment and the extra years needed to recover the upfront costs of buying compared with staying in a rental. Senior economist Kara Ng said that broader measure gives buyers a clearer view of a market than asking prices by themselves.
The company said the national breakeven timeline has worsened sharply since July 2019, when buyers faced an 11-year wait. Zillow also said the national housing shortage remains a major factor, estimating the country is short 4.7 million homes. In the hardest-hit markets, the timelines are much longer; Los Angeles has nearly 345,000 missing homes, according to Zillow, and an almost 38-year breakeven period.
Why Timelines Differ
Zillow said local rent trends and home-price growth are driving wide differences from one metro to another. Austin, Texas, for example, reaches the down-payment goal in roughly eight years, faster than the national pace, but then requires about 18 years to break even because rents there have recently fallen.
Miami shows the opposite pattern. Zillow said buyers there need about five more years than Austin to save for a down payment, but they reach the breakeven point in about half the time once they buy. That means Miami buyers can come out ahead financially roughly three years sooner than their Austin counterparts, even with the longer savings period.
What Buyers Can Check
Zillow said a starter home can shorten the timeline, especially one in the bottom third of regional home values. Nationally, buying an entry-level home rather than renting a typical apartment cuts the combined savings-and-breakeven period to 7.2 years, according to the company’s figures.
The analysis also found that buyers often pay extra for move-in-ready homes. Turnkey properties sold for 2.9% more than expected, and homes described as recently remodeled sold for 2.2% more than comparable properties without renovation language. Fixer-uppers sold for 14% less than similar move-in-ready homes. Buyers can review Zillow’s market data and Freddie Mac’s weekly mortgage-rate reports to compare local conditions before deciding whether to rent or buy.
More on what homes, rents and new builds are doing near you, on RHS Commoner.
