Buying a Home is Now Cheaper Than Renting

By
Real Estate Agent 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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Posted by

Let's Get Moving!
Lynn Ganster
Realtor MLS, ACRE
Morris Williams Realty Top Performer 2012
321-438-9598
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Topic:
Home Buying
Tags:
statistics
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buying vs renting

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Rainmaker
378,069
Pat Champion
Coldwell Banker Camelot Realty - Mount Dora, FL

Great post and information I think this is true in a lot of market areas making is a great reason for buyer's to act now not later.

Sep 20, 2012 09:52 AM #1
Rainer
48,246
Tyler Soulliere
Windsor Realtor - Windsor, ON

Interesting article as just other day read this article which stated that renting is cheaper, but only if your not going to own your home for more then 5 years. Didn't go into depth of where renting and buying is located, but looks like its just an average taken for rent and mortgage rate. Would be interesting to see this done across all major markets, Detroit, as sure wouldn't be 5 years. Here's link if curious, its good reading if anything. http://www.realtytoast.com/is-it-better-to-rent-or-buy-a-home-infographic/

Sep 21, 2012 08:04 AM #2
Anonymous
Anonymous
Mario Martin - Boston

Here in Boston, MA a condo, usually costs any where between 3k-6k per month. Most clients I meet usually are prepared and expected to pay First Month + Last Month + Security Deposit (refundable) + Broker Fee (thats 4 months rent). Thats an absoluete waste of money. An FHA loan is only 3.5% (less than what it costs to move in to someone elses property). The rental market really took this trend after the mortgage crisis (which left a lot of people out of a home).

I always tell my clients this: Work with me, I'll show you how to pay your own mortgage instead of someone else's.

 - Mario

Sep 22, 2012 03:00 PM #3
Rainer
84,951
Jamie King
Hoty Enterprises, Inc. - Huron, OH
Sandusky, OH

Congratulations, Lynn!!! This post was featured in my morning email form LinkedIn Today! That is so incredibly awesome! You go girl!

Sep 24, 2012 06:43 AM #4
Rainer
94,581
Lynn Ganster
Morris Williams Realty - Titusville, FL
P.A.

I'm glad to hear that most agree in their markets too.  I agree on the long term component in many markets but in Florida now is the time to be a buyer and not a tenant.  Glad my post has moved into other media sites.  It will help more buyers understand the importance of timing.

Sep 24, 2012 07:13 AM #5
Anonymous
Anonymous
Steve

Since most apartment communities in the nicer areas of town have large clubhouses, pools, laundry services and the like, I really wonder if the "it's cheaper to own" crowd is comparing apples to apples.

 

I'm sorry, when you have a home you need a lawn mower, yard tools, household tools & the time to maintain your home.  You probably need a car too. 

And if you buy a used home, make sure you have a $5,000 cushion when the HVAC goes down or you need a plumber or the basement or roof springs a leak. 

 

And don't forget the ever rising property taxes!! 

 

It's cheaper & hassle free to rent in the nice neighborhoods.  Sure you could buy a home somewhere less desirable, but would you want to live there?

 

Sep 24, 2012 01:49 PM #6
Rainer
94,581
Lynn Ganster
Morris Williams Realty - Titusville, FL
P.A.

Thanks for the comment Steve.  I don't know what part of the country you currently reside in and real estate is very local.  Florida and many other states are currently experiencing a time when purchasing a home is completely less expensive than renting, even with the costs you mention.  Property taxes and mortgage interest continue to be the largest income tax deductions available and at least offset the costs of home maintainence, yard tools and Orlando has a great public transportation system so that a car is not a necessity.  

Home ownership is for many part of fulfilling the American dream and for those people it is currently the perfect time (low home prices, the lowest mortgage interest rates in decades, and property taxes that have been steadily declining over the past 5 years) to "get something" in return for the dollars that are given to landlords each month with no return.

Some will always contine to rent as they can afford the luxury of renting but not all can or should and now is a perfect time to buy.

 

Sep 24, 2012 03:13 PM #7
Rainmaker
130,181
Jeremy Joslin
Coldwell Banker Residential Brokerage - South Windsor, CT
Professional Real Estate Marketing and Sales

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

Sep 25, 2012 05:17 AM #8
Rainer
94,581
Lynn Ganster
Morris Williams Realty - Titusville, FL
P.A.

Thanks Jeremy and thank you for sharing your market info!

Sep 25, 2012 09:09 AM #9
Anonymous
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.

Sep 27, 2012 09:12 AM #10
Rainer
94,581
Lynn Ganster
Morris Williams Realty - Titusville, FL
P.A.

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.

Sep 27, 2012 02:25 PM #11
Anonymous
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

Sep 28, 2012 04:28 PM #12
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Lynn Ganster

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