Buying A House & The Break Even Point

If you're not looking to settle in somewhere, you probably shouldn't buy a house. That's because, unlike renting, home ownership comes with some up-front costs that make it financially unwise to sell too soon. There's the down payment, of course, but there's also closing costs and moving expenses.

In other words, you're going to be investing a considerable amount of money into your new home and, more than likely, it's going to take you some time before you've built up enough equity to offset those costs. So how long does it take before you break even or better on your new house?

Well, conventional wisdom suggests you should stay in a house five to seven years before you consider selling it. That's plenty of time to make back your initial expenses and build up some equity so that you aren't losing money if, and when, you decide to move. However, it won't necessarily take that long.

In fact, according to recent research from Zillow, the break even point is just two years when looked at on a national basis – but it largely depends on where you live. Buyers in the South and Midwest, for example, will generally have faster break even points than homeowners in larger, more expensive, markets where home prices rebounded more quickly.