In some markets, renting and investing can build wealth faster than buying a house

Based on national trends, it now takes 15 years for new home buyers to save for a down payment and break even financially when compared to renting and investing during that period, according to Zillow.

As home prices hover near record highs, pushing up the cost of homeownership, it now takes about 15 years for new home buyers to save for a down payment and break even financially compared to renting and investing during that period, according to a new analysis by the home-listings platform Zillow.

In 2019, before the pandemic-era surge in home prices, the break-even point was closer to 11 years.

"If you purchased your home prior to the pandemic, buying was an absolute slam dunk," Amanda Pendleton, Zillow's (Z) $(ZG)$ home-trends expert, told MarketWatch. Today and moving forward, "if [mortgage] rates stay elevated and home prices are probably going up, it's just a much different calculus," she said. "Buying a home is a very, very, very long-term decision in a lot of places."

'Homeownership is not your only path forward to wealth building.'Amanda Pendleton, Zillow home-trends expert

Based on national data, a typical home buyer today would need to save for 8.5 years for a 20% down payment on a $374,151 single-family home. With $2,511 in monthly housing costs (which includes a 30-year mortgage at a 6.54% interest rate, plus taxes, insurance and maintenance) and 5.1% annual home-value appreciation, they would need to live there for 6.2 years for their home equity to catch up to what they could have had amassed by renting and investing - for a total of 14.7 years to break even.

As of 2025, the typical homeowner stayed put for 12 years, according to Redfin data.

This is compared to if they had rented a single-family home for $2,314 over that same 14-year period, with 3.7% annual rent increases, and invested the down payment, plus any cost savings compared to owning a home (roughly $200 per month in year one, then diminishing as rent rises) in low-risk assets, earning a 4.59% average annual return.

Based on historical trends, the timeline could be longer, as home values have increased by a lower 4.5% per year on average since 2001.

Pendleton also noted that the 4.59% assumed annual return that renters earned on their investments in this analysis - which is based on the 10-year Treasury yield BX:TMUBMUSD10Y - is "really low" compared to average annual returns in the stock market. If a renter invested in an S&P 500 SPX index fund instead, which historically has grown by an average 10% per year, the timeline for home equity and savings from locking in housing expenses to catch up to this performance would also be longer.

"Initially, the renter is always ahead because they didn't sink their savings into a down payment. Over time, however, the buyer catches up due to a stable monthly payment and home appreciation," Pendleton said. "The point at which the buyer has more money than the renter is the break-even point" - and it takes longer now than it used to because home prices are so high.

In extremely expensive markets where the down payment on a home may be six figures and take more than a decade to save up, "the savings you're going to get from purchasing a home are just never going to catch up to what you're going to earn with your investments," she said. "Homeownership is not your only path forward to wealth-building."

The math changes year to year, based largely on mortgage rates, but "we don't think we're going to go back and ever see pandemic-era mortgage rates again," Pendleton said. "If you're in a position where you're thinking, 'I'd like to buy,' you really need to picture what your life is going to look like 15 years down the road - not just what's going to work for [you] today."

The most challenging markets are in the West Coast, where a home buyer today might not break even until well past retirement age.

In San Jose, it takes about 19.2 years to save for a down payment, based on the area's median income, and 30 years in the house, for a total of 49.2 years to break even, according to Zillow.

In San Francisco, it similarly takes 16.9 years to save for a down payment, and 30 years in the house, for a total of 46.9 years to break even.

In San Diego, the combined timeline to save and break even is 40.4 years.

In Los Angeles, it's 37.7 years.

And in Seattle, it's 31.4 years.

Meanwhile, in markets where the cost to buy is lower or closer to the cost to rent, generally in the Midwest and South, buyers break even much faster.

In Memphis, Tenn., and Pittsburgh, buyers of single-family homes can save and break even in roughly 11 years on average. In Detroit, Indianapolis, Birmingham, Ala., and Louisville, Ky., it also takes fewer than 12 years.

"Buyers should think about not just when they can afford to buy, but how long they'd need to stay before owning makes more financial sense than renting," the Zillow report stated.

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-Venessa Wong