Buy vs. rent: How Houston stacks up

With so many multifamily projects on the books and the inventory for single-family homes at a record low in Houston, it makes one wonder: Is it better to rent or buy?

Turns out, if you stay in your house longer than two years, buying beats renting in Houston, according to Zillow Real Estate Research.

In its new Breakeven Horizon analysis, Seattle-based Zillow, an online residential resource, reports that in Houston, the average overall breakeven point is 1.5 years.

Zillow calculates the costs associated with buying and renting, and then examines how long it takes for buying a home to become a less expensive option over renting, which it calls the breakeven point. The breakeven numbers are mostly influenced by home appreciation values, rental prices and rent appreciation rates, according to Zillow.

Because prices can vary depending on the neighborhood, it also breaks the data down by zip codes within each county to give potential buyers and renters a more accurate snapshot of local conditions. Data by zip code can be found here.

The calculation factors in closing costs, interest rates and projected future home price and rent changes.

Here’s how Houston compares to other cities in Texas:

• In San Antonio, the overall breakeven point is 1.8 years
• In Dallas/Fort Worth, the overall breakeven point is 1.4 years
• In Austin, the overall breakeven point is 2.1 years

Nationally, the 2014 first quarter median Breakeven Horizon between renting and buying is 2.1 years.

Houston’s lease property market was hot in March, according to the Houston Association of Realtors' most recent report. Single-family home rentals jumped 22.3 percent compared to March 2013, while year-over-year townhouse/condominium rentals rose 12.4 percent. The average rent for a single-family home increased 5.2 percent to $1,633 and the average rent for a townhousecondo rose 7.2 percent to $1,496.

The inventory of single-family homes has been at a record low 2.6-month supply throughout 2014, according to HAR.

as seen in HBJ 5/2/14