New HomeAs home prices continue to decline, in many cities it’s cheaper to buy than rent.  A recent study done by Deutsche Bank shows that for the first time in more than 2 decades, buying a home costs less than renting, especially for those purchasing in large metropolitan areas.  And while it’s unlikely that the news will trigger a surge in homebuying, it confirms one more advantage of owning for those considering a home purchase.

 

Today’s housing market is unlike any we’ve experienced in decades, with many buyers remaining on the sidelines waiting to see if the market would stabilize.  However, the declining rates of homeownership have lowered rental vacancy rates, driving up the cost of renting; and those considering renting may find buying a home worthy a second look.  Of course, buying is not the best choice for some, but the changing results in today’s rent versus own calculations do provide additional “food for thought.”  With many areas experiencing some of the best home prices in a decade and with builders and home sellers vigorously competing for the reduced number of buyers, bargains abound.

 

Those in the market for a home, who are able to qualify under today’s tighter mortgage restrictions, should seek the advice of an experienced real estate agent for guidance to the best locations and home buys.    

 

The Housing Guru: The expert source for all your housing questions—now featuring daily updates of Today’s Housing News

 

 
Star Posted by John Mulkey, Housing Guru on 03/19/2011 06:14 PM   Comments (38)   Buying a Home May Be Cheaper Than Renting in the ActiveRain Channel   rent vs buy, home buying, housing market  
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38 Comments on In Many Cities it’s Cheaper to Buy than Rent

20 Most Recent Comments Displayed Show All

MAR
20
2011
1,453,737 Points 46 Featured Posts Outside Blog Called Shot Master

I agree with you. It is cheaper to rent in many markets and if people want to buy they should buy when rates are low and prices are low. Good post.
6:09am • #19
1,422,188 Points 41 Featured Posts Outside Blog Attended Rain Camp Called Shot Master

This is a huge investors market. . I wish I could borrow  10 mill to invest and I would buy 100 rentals!
7:16am • #20
131,509 Points 15 Featured Posts

We are one of those markets... when it's no problem finding properties that can easily acheive 10% annual cash on cash returns paying cash... it is certainly the time to buy/invest.

I'm right with Fernando -- except I'd be happy with just $1 Million.

Even if values go down another 10% here.... you can still make money if you know what you are doing.

By the way... do you have the link to the Deutsche Banksters study?
10:03am • #21
452,806 Points 81 Featured Posts Called Shot Master

Jay - There are a few reasons not to buy, but if they don't apply, go for it!

Brian - It can still be risky; that's why professional advice is important.

Chris-  Exactly!

Joan - The numbers don't dramatically support buying, but it's worth considering.

Hella - Yes, qualifying for a good rental can sometimes be as difficult as buying.

Michelle - Some areas are moving inventory quite well.

Michael - Those "fence sitters" now have something else to consider.

Sharon - The numbers do vary considerably, and with rentals getting scarce, buying can be a great deal.

 
10:44am • #22
452,806 Points 81 Featured Posts Called Shot Master

Gary - Of course there are exceptions; that's why buyers/renters need to do their homework.

Elizabeth - Then--happy selling!

Ruthmarie - I agree.

Matt - Finding the right deal isn't a "slam dunk," but those willing to do the work can find worthy bargains.

Jeff - That's why I always recommend getting advice from the professionals. 

Kate - It's still close to a wash in most areas, just drifting more in favor of buying than in many years. Hope you got a great deal on the gas.  I did.

Susan - And if investors are grabbing the inventory, they probably see the realities of the market.

Evelyn - That's true for my area.

Gita - Buyers just need to study their area.

Fernando - And many are doing just that.

Paul - I spent an hour searching for the study, but could not find it.  My info was based upon dozens of articles and blogs that referenced the study.  I think it may only be available to "paying customers."
10:53am • #23
152,633 Points

Good deals abound in Phoenix, that's for sure.

Good stuff, thanks for sharing it.
11:31am • #24
363,226 Points 5 Featured Posts Attended Rain Camp Called Shot Master

Excellent point John and it is definitely true in our area. Now the problem as you mentioned is qualifying for the mortgage or having enough to put down. Save America, Save up and buy!
12:31pm • #25
691,910 Points 84 Featured Posts Localism Sponsor Outside Blog Hit Router Attended Rain Camp

The affordability in many cities makes it an amazing opportunity indeed !
12:44pm • #26
452,806 Points 81 Featured Posts Called Shot Master

Anthony - Phoenix and several other cities have some great bargains.

Dick & Dixie - It's a different market, but for those who need and can afford a home, it has some great offerings.

Christopher - Yes, for those who are ready to buy.
1:24pm • #27
982,286 Points 114 Featured Posts Outside Blog Attended Rain Camp Called Shot Master

And for those renters . . . this just in Double-Digit Rent Rise Is Coming to the Housing Market
2:29pm • #28
248,795 Points 8 Featured Posts Outside Blog

Sound advice John! Our clients are always excited to hear how much less they'll be paying to actually OWN a home, rather than renting, especially when they factor in the property tax & interest write off they'll receive on their income tax return.

Thx for the great post!

Gina Lemos
3:44pm • #29

Phoenix had become such a great deal to buy my husband and I opted to move across the country and begin our careers over... my average sales price fell from 300K to 70K in less than 18 months... anyone looking to buy in PHX will get a great deal!
5:17pm • #30
452,806 Points 81 Featured Posts Called Shot Master

Carla - The numbers aren't promising for those looking to "save" by renting.

Gina - Thanks for the visit.

Erika - Phoenix as well as several other cities.
9:15pm • #31
712,458 Points 118 Featured Posts Localism Sponsor Outside Blog Called Shot Master

John,

I funded a purchase in Tempe.  Full asking price from the bank for this REO was $46,800.  The buyer got a 30 year mortgage fixed at 5% even.  His income was $8.50 an hour working as a night watchman, and he qualified for an FHA mortgage.  His full PITI/MI payment was nearly $200. less than he was paying for rent.

Mike in Tucson
10:18pm • #32
MAR
21
2011
452,806 Points 81 Featured Posts Called Shot Master

Mike - Those are the kinds of deals that people need to take advantage of.
9:10am • #33
149,291 Points 1 Featured Post Outside Blog

Very very true. The interest rate is the most volatile thing we have here in San Antonio and it always amazes me when a buyer thinks it is in their best interest to just wait it out because they think the prices will continue to fall. You can lead a horse...
9:43am • #34
839,784 Points 69 Featured Posts Outside Blog Called Shot Master

John...good topic post

Buy low and sell high everyone understands. But how many line up their ducks to quack it? Fernando #20 tells it like it is. To buy rentals and park your funds there is an investors answer to prayer. However, a moment of silence please for those that were overcome by their own HELOC'S, borrowed heavily to purchase more property, and took what appeared to be the wise plunge. Their thinking was sound, but they didn't buy low....You cannot argue with Real Estate ducks...they either line up and quack or they don't....thank you
10:55am • #35
MAR
22
2011
452,806 Points 81 Featured Posts Called Shot Master

Randy - Yes, the purchase price may fall, but higher interest rates will more than consume the difference.

Richie - That's why professional advice is always a good idea.  What appears to be a bargain, may be a potential future nightmare.

 
11:47am • #36
213,894 Points 10 Featured Posts Outside Blog

I’m finding that this is a great time to buy, especially for those who can either pay cash or have a sizable down payment. 
12:08pm • #37
452,806 Points 81 Featured Posts Called Shot Master

Sue - It can be a great time to buy, but not all "buys" are deals.  This market requires lots of study before proceeding.
1:48pm • #38

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