It’s Official, It’s Now Cheaper to Buy a Home Rather than Rent!

Posted by Bud Bruening – Utah’s Lowest Mortgage Rates
 
HOMEOWNERSHIP BEATS RENTING IN 74 PERCENT OF MAJOR U.S. CITIES
Trulia Releases Summer Rent vs. Buy Index, Revealing Housing Market Rebound in Miami and Continued Setbacks in Detroit, Fresno and Sacramento

SAN FRANCISCO, August 16, 2011 – Trulia today released its Summer 2011 Rent vs. Buy Index, which compares the cost of buying and renting a two-bedroom apartment, condominium or townhouse in America’s 50 largest cities based on population.

 

Homeownership Affordability Remains High
Based on current market conditions, buying a home
is cheaper than renting in 74 percent of major U.S. cities. Meanwhile, it is clearly better to rent in New York, Fort Worth, Omaha, Seattle, San Francisco and Kansas City. In between both sides of the rent versus buy spectrum, there is a grey area. Depending on personal circumstances, such as one’s tax bracket, it may make more sense to buy a home in Oakland, Austin, San Jose, Memphis, Boston, Los Angeles and Portland, even though it is still relatively cheaper to rent.

Top Five Cities Where Buying Beats Renting

#

City

State

Price:Rent Ratio

1

Las Vegas

NV

6

2

Detroit

MI

7

3

Mesa

AZ

7

4

Fresno

CA

7

5

Arlington

TX

8

Top Five Cities Where Renting is Cheaper than Buying

#

City

State

Price:Rent Ratio

1

New York

NY

36

2

Fort Worth

TX

32

3

Omaha

NE

27

4

Seattle

WA

24

5

San Francisco

CA

24

NOTE: The price-to-rent ratio is the median listing price divided by the annualized median rent. Ratios that are 15 and under indicate buying is less expensive than renting, while ratios that are 20 or higher indicate renting is less expensive than buying.

 

Housing Market Rebounds and Setbacks in Foreclosure Hotspots

Buying a home in cities flooded with foreclosures continues to be considerably cheaper than renting, but this may be poised to change in the coming months. In Miami, for example, it is still less expensive to buy, but a mini-buying boom created by foreign investors and foreclosure freezes have caused its price-to-rent ratio to jump by 112 percent from 6 in January to 13 in July. Meanwhile, recent job gains in the auto industry have not countered Detroit’s falling home prices. For now, the city has experienced a setback since January with its price-to-rent ratio dipping 39 percent. Las Vegas, on the other hand, continues to be the best place to buy instead of rent for the past six months.

#

City

State

Price:Rent Ratio

July 2011

Price:Rent Ratio

January 2011

% Change

1

Miami

FL

13

6

112%

2

Phoenix

AZ

8

8

1%

3

Las Vegas

NV

6

6

-7%

4

Tucson

AZ

13

14

-10%

5

Mesa

AZ

7

8

-11%

6

Sacramento

CA

8

13

-17%

7

Fresno

CA

7

11

-32%

8

Detroit

MI

7

12

-39%

PRE-APPROVED QUOTES

  • “While recent stock market volatility on top of the slow economic recovery makes homebuyers nervous, it has not destroyed the American dream of homeownership. However, prospective homebuyers, who are ready and qualified to buy, face an uphill battle despite falling home prices and record-low mortgage rates,” said Ken Shuman, Head of Communications at Trulia. “Today, many banks are actually less enthusiastic about approving residential mortgage applications, which has dragged out the home buying process. Until a middle ground on lending practices can be met, many highly-qualified buyers may be forced to be renters by choice for now.”

  • “Many aspiring homeowners are on the fence about renting and buying in today’s market. Should they take advantage of falling home prices and low borrowing costs, or should they continue to rent until the economy stabilizes?” said Ken Shuman, Head of Communications at Trulia. “Price alone should never be the sole factor in deciding to purchase a home. Instead, buyers should first ask themselves if they plan to live in the home for at least seven-to-10 years, could make monthly payments on the house, and have enough cash in the bank for a down payment and an additional six to eight months worth of mortgage payments. If you can answer ‘yes’ to each of these questions, then the cost of buying a home definitely outweighs renting in most cities.”

 

METHODOLOGY
Trulia calculated the price-to-rent ratios for the 50 largest U.S. cities using the median list price compared with the median rent on two-bedroom apartments, condominiums and townhomes listed on Trulia.com as of July 1, 2011. To view the complete methodology including sample price-to-rent ratio calculation, interpretation key for the ratio and definitions, click
here.

 

The Mortgage Solutions Team in Utah has that resources you need to get you the very best Mortgage Programs and lowest  Mortgage Rate available. If you are looking to Purchase a home or Refinance your existing home, give us a call. We work one on one with our clients and tailor a mortgage program to fit your needs. We create solutions for all your Mortgage needs.

 

 

 

Bud Bruening
512 E. Winchester
Murray, Utah 84017
Ph. 801.716.5246
Cell. 801.230.3107
Like us on Facebook
Follow me on Twitter
www.mymtgsolution.com
Utah’s Lowest Mortgage Rates

Leave a comment

Filed under Credit Score Info, Market News, Mortgage Updates, Real Estate Updates

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s