Krisy, Renter in Salt Lake City, UT

What is the cross-over point for pricing between rent and buying in Salt Lake City, Utah?

Asked by Krisy, Salt Lake City, UT Thu Aug 12, 2010

In the Wall Street Journal article, http://online.wsj.com/article/NA_WSJ_PUB:SB10001424052748703… it referenced your cross over points for some major cities. I know Salt Lake is far from major, but I would love to know what the cross-over point to determine if it is smarter to buy or rent here is. Thank you!

Help the community by answering this question:

Answers

3
I've seen studies like this before and it's an interesting phenomenon that at a certain price point it becomes cheaper to buy than rent a specific property, but over all this leaves out many factors that need to be taken into account. If anything I think it underestimates the advantages of renting (something you don't hear from most agents).
Some of the factors that don't go into this are capital expenses, like major homes repairs such as a new roof, it also doesn't take into account the costs of buying and selling, about 14% of the total home price for the buy and then the sell put together. It also doesn't take into account flexibility, it's easy to move if you are renting, hard if you are buying, I wouldn't advise a buy if you aren't staying put for at least 7-10 years.
There are also some other market conditions, condos rent for more than houses, location in the city, etc. This does not of course mean that buying can't be a great option even at a low price point, there is the accumulation of equity, tax write offs for interest and some expenses, houses are great ways to guard against inflation, etc.
Let me know if you are interested in moving into the home buyer segment or just if you have any other market questions, I'm always glad to help answer questions.
Thanks
Web Reference: http://velox-realty.com
0 votes Thank Flag Link Thu Sep 1, 2011
Krisy,

It would really depend on the price point and rents that you would be paying. This is a an easy decision to me, whether you would like to throw away money and pay another persons mortgage. The timeless factor especially now is how much much money you could make in the future by simply making a payment and picking up a great home in an area of your choice, at rock bottom prices.

In a direct response to your question my opinon would be anywhere from $1000 on up. With interest rates as low as anyone has seen in 50+ years, this makes any payment on a home to own as affordable if not more than ever. Not to mention you don't have the tax advantages of writing off a majority of your interest to taxes for the first while. This no doubtably can't really be done with rent.

To purchase a home in this market at these prices make many home owners envious. If you are contemplating purchasing a home, you should definitely look further into it and get pre-approved. Then you can see what homes are out there for the same price you would be paying for rent.

If you would like to explore the options that might be determining factors, simply give me a call or send me an email.

I hope this helped in reference to your question.

Thank you for your time and consideration,
Rhett Allen
Hot Spot Investments
VIP Residential & Commercial Sales Manager/REALTOR
(435)627-7353
thenumber1agent@gmail.com
0 votes Thank Flag Link Wed Oct 27, 2010
Krisy, that's a good question. Frankly, I've never heard about anyone talking about this in terms of cross-over points so I went back and read this article. According to their 15 times annual rent analysis, with an educated guess on my part, a 3 to 4 bedroom home's cross-over point is going to be around $198,000 to $216,000. I'd say, right now, we're probably somewhere in the 11-12 times annual rent range. So, this just tells you it's a "buyer's market." Whether or not buying vs. renting makes sense for you, though, also involves you taking a look at your marginal tax bracket, the interest rate environment, your price range and your loan qualification "readiness." For a good calculator for a rent vs. buy analysis. Visit my web reference link below.
0 votes Thank Flag Link Wed Aug 18, 2010
Search Advice
Ask our community a question
Email me when…

Learn more

Copyright © 2015 Trulia, Inc. All rights reserved.   |  
Have a question? Visit our Help Center to find the answer