- The most recent quarterly Zillow Breakeven Horizon report found that San Antonio, TX, and Nashville, TN, top the real estate data company's list of homeownership "sweet spots."
- Both housing markets — along with Tampa, FL, Jacksonville, FL, Raleigh NC, and Charlotte, NC — exhibit high income and employment growth, as well as a relatively short breakeven horizon, which Zillow considers the point at which buying a home becomes less expensive than renting the same home.
- The current U.S. breakeven horizon is one year and eight months, down from a February figure of one year and nine months, and most "sweet spot" cities clock in at or lower than the average.
Aside from the average breakeven horizon in the U.S. slightly dipping to one year and eight months, average U.S. employment growth is 2%, and average U.S. income growth is 2.3%. In comparison, San Antonio has a breakeven horizon of one year and four months, job growth of 2.8% and income growth of 4.1%. Nashville has similarly encouraging numbers, with a breakeven horizon of one year and five months, job growth of 3.7% and income growth of 1.8%.
In contrast, the long breakeven horizon of some cities, such as San Jose, CA — where Zillow estimated it to be three years and four months — negates the benefits of income and job growth.
Zillow chief economist Svenja Gudell said that while all of the "sweet spot" cities provide great deals and make sense for those looking to settle down, the homeowner benefits assumed in the Breakeven Horizon report assume that potential buyers can qualify for a mortgage and make a standard down payment.
However, qualifying for a home mortgage and saving for a down payment continues to be difficult for many Americans, particularly those with student debt. A recent joint National Association of Realtors and SALT/American Student Assistance survey found that student loan debt was keeping 71% of potential homeowners with debt from buying a home. Not only were debt preventing buyers from saving for a down payment, but many had past trouble in managing the student debt, and late payments had hurt their credit scores.
In addition, rising home prices, helped along by a lack of inventory, are forcing potential buyers to continue to pay ever-increasing rents, which further constrain the ability to save for a down payment.