IS BUYING CHEAPER THAN RENTING?

Over the last year or so, I have had several friends, including one of my sons, sell their home and become renters. The reasons are various, but many thought renting was cheaper in the long run than owning a home. No more H VAC problems, lawn maintenance, leaking roof or pipes, etc., to be dealt with. Even now, when I talk with some potential home buyers, I am asked, “Is buying cheaper than renting?”

In some cases, my answer is, “It depends.” If you are not planning to stay in your home very long as you move or are moved a lot by you employer, it may be best to rent. The geographical location is also a determining factor. Believe it or not, your health is also a factor.

Well, Trulia just published their latest Rent vs. Buy Report. The report shows that home ownership remains cheaper than renting, with a traditional 30-year fixed rate mortgage, in 98 of the 100 largest metro areas in the United States.

In the six years that Trulia has conducted this study, this is the first time that it was cheaper to rent than buy in any of the metropolitan areas.

It’s no surprise, however, that those two metros are San Jose and San Francisco, CA, where median home prices have jumped to over $1 million dollars this year. Home values in San Jose have risen 29% in the last year, while rents have remained relatively unchanged.

For the 98 metros where home ownership wins out, 97 of them show a double-digit advantage when buying. The range is an average of 2.0% less expensive in Honolulu (HI), all the way up to 48.9% in Detroit (MI), and 26.3% nationwide!

Below is a map of the 100 metros that were studied. The darker the blue dot on the metro, the cheaper it is to buy there.

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To calculate the true cost of renting vs. buying, Trulia includes all assumed renting costs, including one-time costs (like security deposits), and compares them to the monthly costs of owning a home (insurance, mortgage payments, taxes, and maintenance) including one-time costs (down payments, closing costs, sale proceeds).

They also assume that households stay in their home for seven years, put down a 20% down payment, and take out a 30-year fixed rate mortgage. The full methodology is included with the study results here.

Thinking about buying a home but also thinking renting may just be cheaper? Give us a call at 252-257-4822 and let’s talk or visit our web-site at www.cansellnow.com .