Californian homebuyers take longer to ‘break even’

by Steve Randall10 Apr 2015
Renters in California who want to make the move to home ownership will take longer than those in other major metros to break even, according to a recent survey from Zillow.  

Break even is the point at which all the costs of buying including a downpayment, home loan repayments, taxes and maintenance costs are recouped when compared to the cost of renting the same property.

The national average in 2014 was 1.9 years down 2% from 2013 but in California the figures are well above average and have risen sharply over the last 12 months. In LA it’s 5.1 years (up from 1.5 years); in San Diego it’s 3.8 years, the third highest in the U.S., (up from 1.9); in San Francisco it’s 2.6 years (up from 1.9); and in Sacramento it’s 2.2 years (up from 1 year).

The survey also quizzed renters as to why they haven’t made the move to buying their own home. More than half had been renting the same home for many years and 82% were long-term renters; 20% prefer to rent and 14% were not planning to stay in the same area long enough to want to buy.

Of the others, the barriers to ownership include; 16%  don’t qualify for a mortgage; 18%  can’t afford the taxes; and 13% don’t have savings for a downpayment. A quarter of respondents struggle with rent payments making it even harder to put money aside for home buying costs.