The cost of owning vs. renting has begun to swing in the direction of home ownership. After 2 yrs. of rapid
home depreciation, the cost of rental payments vs. after tax mortgage payments is favoring home ownership.
Many are finding that they can pay less on a mortgage than what they would rent.
Home affordability is also at a high not seen since the '90s. The minimum household income needed to purchase an entry-level home at $248,030 in California in the fourth quarter of 2008 was $48,900, based on an adjustable interest rate of 6.02 percent and assuming a 10 percent down payment. First-time buyers typically purchase a home equal to 85 percent of the area's prevailing median price. The monthly payment including taxes and insurance was $1,630 for the fourth quarter of 2008.
At $48,900, the minimum qualifying income was 42 percent lower than a year earlier when households needed $83,700 to qualify for a loan on an entry-level home.Recent decreases in home prices and mortgage rates have brought affordability into better alignment with income levels of the typical California households, where the median household income is $59,160.
At 76 percent, the High Desert region was the most affordable area in the state.The San Luis Obispo County region was the least affordable in the state at 44 percent, followed by the Los Angeles County region at 46 percent.
Lower prices and interest rates are spurring some buyers to get off the sidelines, though lending standards are stricter than before, particlularly
on jumbo loans (loans higher than $729,750, the conforming loan limit.
Below is a helpful own vs. rent calculator to assist you in this decision.
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