Buying a Home is Now Cheaper Than Renting

By
Real Estate Broker with Morris Williams Realty 3068477

 

 

Real Estate Marketing Insider issued some observations about the report that buying a home is cheaper than living in a rental property today, and its opinion is that this will help home sellers because this information can be incorporated into marketing strategies for real estate that encourage property sales.

Forbes has published a report from the chief economist for Trulia.com, who claims that currently, owning a home is cheaper than renting. To support this claim, he looks at several different factors. First, he looks at the difference between the recent 2.3% rise in home prices versus the rise in rents, which at 4.7%, has been higher. Next, he combines this information with the fact the mortgage rates are quite low right now, which means that in the 100 largest metropolitan areas in the United States, the average homeowner can save 45% over renting. Of course, this optimistic news is tempered by the current strict standards for obtaining a mortgage and the dearth of properties on the market. These numbers are also an average and in some areas, such as Detroit, buying is 70% less expensive than renting, but in stronger markets like Honolulu, the difference is much smaller, making renting a more viable alternative.

Trulia.com is a website that is designed to work with the MLS system in order to provide detailed information about properties. This information about a single property is supplemented with information about local schools, crime statistics, and information about commute time. This website was launched in 2006, towards the end of the housing bubble, but has managed to thrive even when the housing market collapsed and has struggled since.

Detroit has had a weak and suffering economy for decades and was also hit very hard in the 2008 financial meltdown. Because of this, real estate prices suffered far more in Detroit than they did in other areas. Recently, however, the American auto industry has begun to recover and other companies have built facilities in the Detroit area, which is creating more jobs and help to alleviate properties. Some areas are starting to recover in terms of real estate, but there are many foreclosed properties in the area.

Honolulu is the capital of the state of Hawaii and is the largest city in the Hawaiian Islands. Because it is on an island with real estate at a premium, there are many skyscrapers in Honolulu, including residential high rises. This means that there are many different rental properties available in the area, but private homes are rarer.

Real Estate Marketing Insider today commented on argument that buying a home is much cheaper than renting in today’s economic climate.

Reprint (PRWEB) September 16, 2012
 

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Let's Get Moving!
Lynn Ganster
Realtor MLS, ACRE
Morris Williams Realty Top Performer 2012
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Topic:
Home Buying
Tags:
statistics
prices
marketing
mortgage rates
rental rates
buying vs renting

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Rainmaker
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Jeremy Joslin
Professional Real Estate Marketing and Sales
Coldwell Banker Residential Brokerage

Excellent article Lynn and we are seeing this in CT as well. 

September 25, 2012 05:17 AM
Rainer
92,054
Lynn Ganster
P.A.
Morris Williams Realty

Thanks Jeremy and thank you for sharing your market info!

September 25, 2012 09:09 AM
Anonymous #10
Anonymous
J Keating

I echo Steve's comment.  An analysis that takes into account only purchase price and mortgage rates is missing a big part of the picture.  Ownership costs, including real estate taxes, insurance, maintenance, and local fees are a substantial cost for homeowners.  Also, any financial analysis needs to take into account exposure to future risk - real estate is an illiquid asset and is sensitive to many economic trends that are beyond an individual homeowners control and beyond the ability of anyone to predict with any accuracy over over the medium and long term.  The mortgage crisis illustrated what can happen when we try to push people into homeownership situations where they are not prepared to handle the true ownership costs and downside risk.  This is a large part of the reason why homes are so cheap in Florida - the mass exodus of overleveraged homeowners and the resulting dramatic rise in inventory. I think analyses such as Trulia's do a bit of a disservice to homebuyers and the housing market in general.

September 27, 2012 09:12 AM
Rainer
92,054
Lynn Ganster
P.A.
Morris Williams Realty

Thanks J for commenting.  

Many think of their homes in terms of a place to establish roots, raise their families, establish community ties and grow their lives.  When considering these things they do not necessarily think of it in the terms that are concerning to you.  All investments have an upside and a downside potential and no investment is foolproof.  

There are leveraged risks and risks that people are willing to take to secure the lifestyles that they do not gain from renting.  I anticipate that you are not in that group and I wish you much happiness in securing your perfect investment.  

As far as Trulia is concerned my opinion is that it is a starting place for the consumer to get a generalized cross section view of a real estate market and help to familiarize themselves before enlisting the assistance of a professional Realtor.

September 27, 2012 02:25 PM
Anonymous #12
Anonymous
G. Glasco

I just passed on the very same information about renting vs buying with a client today! Principal, Interest, Taxes, and Insurance figured in, buying today in many Southern California markets is more advantageous than collecting monthly rent receipts. Right on Lynn !

 

G. Glasco

Century 21- Arcadia, CA

September 28, 2012 04:28 PM
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Lynn Ganster

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Additional Information

Marketing, Blogging and Real Estate Solutions, Lynn's Active Rain Blog, Lynn Ganster has 10 years of experience in the real estate industry as a licensed Realtor. Lynn consults with buyers and sellers regarding the market, pricing and market trends as they are occuring. Top Producer, E-signature, Technology driven, virtual assistants virtual tours, flip videos, real estate photography.