Homeownership 45% Cheaper Than Renting
Sept. 18, 2012 â€“ Trulia
released its Summer 2012 Rent vs. Buy Report, and buying was a better
deal in all top 100 American cities considered.
To conduct the study, Trulia says it started by looking at the homes for
sale and rent on its own site between June 1 and Aug. 31, 2012. For
comparisons, it assumed a 3.5 percent mortgage, itemized income tax
deductions at the 25 percent federal tax bracket, and a seven-year time
horizon before the home is sold. It factored in â€œall cost components,â€
including transaction costs, taxes and opportunity costs. Â
Overall, Trulia says, homeownership wins hands down right now. While the
buy-versus-rent savings varied greatly among the cities, buying was the
best choice in all 100 markets.
Trulia says itâ€™s about more than percentage differences, however.
Detroit ranked at the top, where buying can save 70 percent, and it
overshadows San Francisco where a buyer only saves 28 percent. However,
homes are more expensive in San Francisco, so the actual dollar savings
of $899 near the Golden Gate Bridge could overshadow any percentage
savings in Detroit.
One Florida metro area made the top five list for home buying
affordability. According to Trulia, the monthly cost of homeownership in
Lakeland-Winter Haven is $495, while the cost of renting is $1,276 â€“ a 61 percent ($781) savings for those who choose to buy rather than rent.
â€œHomeownership is cheaper than renting in all of the 100 largest metros
by a wide margin,â€ says Jed Kolko, Truliaâ€™s chief economist. â€œRents
continue to rise faster than prices, and mortgage rates are near record
However, Kolko says many people canâ€™t take advantage of homeownershipâ€™s
historical affordability because â€œit takes years to save enough for a
downpayment, and it takes a high credit score to even qualify for a
mortgage, let alone to get the best rate.â€
Â© 2012 Florida RealtorsÂ®