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The Best Big Cities for Renters

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Timing Is Everything

By Suzanne Woolley - Mar 6, 2013 3:30 PM CT

To many of us, renting a home seems like throwing away money. Shouldn't we buy and let that money build equity, rather than line a landlord's pocket? Turns out that in many major cities it makes perfect financial sense to rent for a few years or more, according to real estate information web site Zillow.  Zillow's "breakeven horizon" metric crunches the costs of owning or renting over 30 years -- tracking them, in the case of a home, from purchase to sale. Where the two sets of costs converge is the point after which buying is smarter. For example, if you're going to live in Nashville in for two years, buying won't give you any financial edge over renting, because the breakeven is 2.6 years. In New York, with home values high, let's just say it takes even longer.

No. 10: Nashville

Breakeven horizon: 2.6 years* 

Zillow Rent Index: 3.8%*

Homes sold at a loss: 24.56%*

On the TV show "Nashville," country music star Rayna James's home is a 6-bedroom, 12-bath, 20,533-square-foot estate. In real life, the house went on the market with a $19.5 million price tag last fall -- a far cry from the Zillow Home Value Index (ZHVI) of $140,000 for Nashville. With that number up 6 percent, Nashville's housing market has held up fairly well compared with that of Memphis, where home values are down 3.5 percent and rental rates are about flat, says Zillow Chief Economist Stan Humphries. The Zillow Rent Index (ZRI) for the city rose 3.8 percent. In Nashville, it takes just over 2.6 years before buying starts making more financial sense than renting.

*ZRI and ZHVI median figures show year-over-year percent change for December 2012. The breakeven analysis was done using data through September 2012. Home loss figures are for December 2012.

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