Buying Is Now 26.3% Cheaper Than Renting in the US

By
Real Estate Agent with Keller Williams Greater Omaha 20041001
Buying Is Now 26.3% Cheaper Than Renting in the US | MyKCM

The results of the latest Rent vs. Buy Report from Trulia show that homeownership 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 homeownership 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.

Buying Is Now 26.3% Cheaper Than Renting in the US | MyKCM

In order 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.

Below is a chart created with the data from the last six years of the study, showing the impact of the median home price, rental price, and 30-year fixed rate interest rate used to calculate the ‘cheaper to buy’ metric.

Buying Is Now 26.3% Cheaper Than Renting in the US | MyKCM

In 2016, when buying was 41.3% less expensive than renting, the average mortgage rate was the driving force behind the difference. Rates this year are the highest they have been in six years which has narrowed the gap, all while home price appreciation has also been driven up by a lack of homes for sale.

Cheryl Young, Trulia’s Chief Economist, had this to say,

“One point deserves emphasizing: The ultra-costly San Francisco Bay Area is not a harbinger for the nation as a whole. While renting may outweigh buying in San Jose and San Francisco, it is unlikely that renting will tip the scales nationally anytime soon.”

Bottom Line

Homeownership provides many benefits beyond the financial ones. If you are one of the many renters out there who would like to evaluate your ability to buy this year, let’s get together to find your dream home.

close

This entry hasn't been re-blogged:

Re-Blogged By Re-Blogged At
Topic:
Real Estate Market Trends
Location:
Nebraska Douglas County Omaha
Groups:
Market Updates
Market Reports
Omaha Real Estate
Tags:
omaha real estate
omaha homes for sale
top omaha real estate agents
top omaha realtors
best omaha real estate agents
guaranteed sold
omaha guaranteed sale
best omaha realtors
omaha real estate professional

Post a Comment
Spam prevention
Spam prevention
Show All Comments
Rainmaker
633,479
Norma J. Elkins
Elite Realty Group - Morristown, TN
Realtor - Elkins Home Selling Team

Wow what awesome info to pass on to possible clients to show them about renting vs buying.  Thanks for sharing!

Aug 02, 2018 06:15 AM #1
Post a Comment
Spam prevention
Show All Comments

What's the reason you're reporting this blog entry?

Are you sure you want to report this blog entry as spam?

Rainmaker
756,710

The Trumm Team Omaha Homes for Sale, Real Estate

Ask me a question
*
*
*
*
Spam prevention

Additional Information