It's Now Cheaper to Buy a Home than Rent One in All 100 Largest US Cities

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It's Now Cheaper to Buy a Home than Rent One in All 100 Largest US Cities

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Started 8 months ago by News
Latest reply from Timeone

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News
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What to Consider in Deciding Whether to Rent or Buy
RICHARD FLORIDA
12:35 PM

Real-estate website Trulia's "Summer 2012 Rent vs. Buy" report, released Thursday, points to the large U.S. metros where owning a house, when taxes and other transaction and opportunity costs are included, is actually considerably cheaper than renting one. These latest findings echo numbers found in prior reports.

In fact, in every single one of America's 100 largest metros, according to the report, owning is now cheaper than renting. For renting, these numbers include renter's insurance and a security deposit. The numbers for owning include closing costs, maintenance, insurance, and property taxes, and assume the house won't be sold for at least 7 years.

READ MORE: http://www.theatlanticcities.com/housing/2012/09/what-consider-deciding-whether-rent-or-buy/3257/

Posted 8 months ago #
mrpoppinzs
Arena District
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Averages

I know a lot of people who rent in the SN or AD who definitely could not afford to buy there. I have also seen functional houses in some areas go for $15k.

Posted 8 months ago #
NEOBuckeye
Ohio At-Large
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The 7 year no-sale assumption is a pretty big one these days. In this transient and unstable economy, it's a gamble to believe you will have a steady job and live in the same city for two or three years now, let alone seven or more.

It also assumes people should want all of the hassles of home ownership and upkeep. More power to you if you do, but it's not for everyone.

Posted 8 months ago #
dubdave00
Dublin
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NEOBuckeye said:
The 7 year no-sale assumption is a pretty big one these days. In this transient and unstable economy, it's a gamble to believe you will have a steady job and live in the same city for two or three years now, let alone seven or more.

Very true. Not only is it a gamble, but for many careers, there's simply more money to be made if you're open to be mobile.

I also think home ownership faces a perception problem. I know so many people who see buying a home not just as a choice of where to live, but as a choice of where they won't be living for some time. Thus, home-buying gets the rap of being a dream-killer just as much as being a dream-maker.

Posted 8 months ago #
Walker
The KLD / Downtown / Gay Street
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NEOBuckeye said:
It also assumes people should want all of the hassles of home ownership and upkeep. More power to you if you do, but it's not for everyone.

Isn't that kind of a given, no matter what the economy looks like or the housing market / rental market looks like?

Posted 8 months ago #
Walker
The KLD / Downtown / Gay Street
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NEOBuckeye said:
The 7 year no-sale assumption is a pretty big one these days. In this transient and unstable economy, it's a gamble to believe you will have a steady job and live in the same city for two or three years now, let alone seven or more.

Use the interactive map and switch it to three years. The result doesn't look that much different... only three markets (NYC, SJ & SF?) move into the realm of renting being slightly more affordable on average:

http://trends.truliablog.com/vis/rentvsbuy-summer2012/

Posted 8 months ago #
NEOBuckeye
Ohio At-Large
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Good points, Walker. Still, even if the cost comparison is relatively unchanged over time, the choices of many on this issue have certainly been influenced by the economic circumstances of the past 5 years.

I guess a lot of folks are quite anxious to see whether Gen Y/the Millenials are going to remain renters perpetually, or start buying homes and commit to living in one place as their Boomer parents and many of their grandparents largely did. Homeownership may prove for some to be cheaper than renting, but is the premium paid for being a renter and retaining a higher degree of location flexibility/the ability to move on short notice the better value?

Posted 8 months ago #
Walker
The KLD / Downtown / Gay Street
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NEOBuckeye said:
Homeownership may prove for some to be cheaper than renting, but is the premium paid for being a renter and retaining a higher degree of location flexibility/the ability to move on short notice the better value?

I think we're probably more likely to see people willing to commit to owning if they have a better chance of selling or renting if they decide to move elsewhere. Not that anecdotes speak too strongly on these trends, but I know at least a dozen people who have moved in the past year and rented out their houses either intentionally because they want the rental income (good market for it right now) or out of necessity (the house wasn't selling like they wanted it to).

Anyway, I found these graphics interesting, but by no means does it say that 100% of everyone in every city should be buying a home instead of renting. ;)

Posted 8 months ago #
JonMyers
HCMC, Vietnam ✈
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Yeah, you never know what will happen a year from now, and what will hit home, let alone 7 years from now.

Researcher says rising corn prices could spark global food riots

I honestly believe maximum mobility and flexibility is a huge asset that trumps home ownership.

NEOBuckeye said:

Homeownership may prove for some to be cheaper than renting, but is the premium paid for being a renter and retaining a higher degree of location flexibility/the ability to move on short notice the better value?

Posted 8 months ago #
mrpoppinzs
Arena District
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The Fed is buying mortgage bonds ($40 billion a month at taxpayers expense) which will bring interest rates even lower than their current historic ultra lows. Obviously the government is enticng people to buy. Don't know if they will be successful, but someone is gonna profit from this.

Fed to buy mortgage bonds, plans to keep rates ultra-low into 2015, says more action may come

Read more: http://www.foxnews.com/politics/2012/09/13/fed-to-spend-40b-month-on-bond-purchases-to-boost-weak-economy-no-end-date-set/

Posted 8 months ago #
Walker
The KLD / Downtown / Gay Street
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JonMyers said:
Yeah, you never know what will happen a year from now, and what will hit home, let alone 7 years from now.

Can't that really be said for all people across all generations in every part of the world for pretty much the history of the world? ;)

I understand the argument for flexibility, but changing jobs doesn't always mean changing cities. Changing food costs doesn't always require changing mortgage payments.

It sometimes sounds like people preaching the flexibility of rentals makes it sound absolutely 100% impossible to sell a house or to rent it out to someone else. ;)

Posted 8 months ago #
Timeone

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We weren't planning on purchasing when we moved to Columbus but once we realized our mortgage was going to be about the same as what we paid in rent in Chicago, we decided to buy.

We couldn't have afforded to own anything in Chicago and were surprised we found a place like we did in Columbus.

Posted 8 months ago #