Buying a Home Is Cheaper than Renting
Buying a home is 44% cheaper than renting in America’s 100 largest metro areas, according to a recent study by Trulia.
The savings accrued when buying as opposed to renting varied upon location. Buying is less than half the cost of renting in 46 of the 100 largest metros. The lower saving rates were in California and New York and the highest were in the Midwest. The savings varied from 19% in San Francisco to 70% in Detroit.
Those areas with a higher savings rate include Memphis (62%), Kansas City (60%), and Indianapolis (58%). Those areas with a lower savings rate include Los Angeles (35%), New York (26%) and Honolulu (23%).
The report’s calculation assumes a 3.5% 30-year fixed-rate mortgage, 20% down, itemized tax deductions at the 25% bracket, and the buyer staying in the home for seven years. Trulia provides an interactive map that reveals how the savings change under alternative scenarios. For example, if a homeowner does not itemize (many homeowners do not), the average savings goes from 44% to 35%.
The report factors in many considerations, such as maintenance, insurance, taxes and the fact that the average home for sale is 47% bigger than the average rental unit. You can scroll down here to review a detailed analysis of the report’s methodology.