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SAN FRANCISCO, September 19, 2013 – Trulia (NYSE: TRLA), a leading online marketplace for home buyers, sellers, renters, and real estate professionals, today released its Summer 2013 Rent vs. Buy Report, revealing whether buying a home is more affordable than renting in America’s 100 largest metropolitan areas. Looking at homes for sale and for rent on Trulia between June 1 and August 31, 2013, this study compares the average cost of renting and owning for all homes on the market in a metro area, factoring in all cost components including transaction costs, taxes, and opportunity costs. For the full report and methodology, see here.

Rising Mortgage Rates Narrowing Rent vs. Buy Gap
In the last year, the mortgage rate for a 30-year fixed-rate loan rose from 3.75 percent to 4.80 percent,[1] raising the cost of buying a home relative to renting. In fact, homeownership is now 35 percent cheaper than renting nationally, down from being 45 percent cheaper one year ago. Yet despite their current upward climb, mortgage rates will not tip the housing market nationally in favor of renting over buying until rates hit 10.5 percent nationally, given current home prices and rents.

San Francisco Bay Area Almost Tips in Favor of Renting
While homeownership is still more affordable than renting in all of the 100 largest metros, rising mortgage rates may soon turn the tide. Buying a home is now less than 10 percent cheaper than renting in San Jose and San Francisco– a dramatic shift from being 31 percent and 28 percent cheaper a year ago, respectively. Even in Detroit, where purchasing a home is a no-brainer, buying has narrowed to being 65 percent cheaper than renting in 2013, versus being 70 percent cheaper in 2012. If rates keep rising and current rents and prices remain flat, San Jose will become the first housing market to tip in favor of renting once mortgage rates hit 5.2 percent.

Top 5 Metros Where Buying a Home is a Tougher Call


U.S. Metro

Cost of Buying vs. Renting (%), Summer 2013

Cost of Buying vs. Renting (%), Summer 2012

Mortgage Rate Tipping Point When Renting Becomes Cheaper Than Buying, Summer 2013


San Jose, CA





San Francisco, CA





Honolulu, HI





Orange County, CA





New York, NY-NJ






Top 5 Metros Where Buying a Home is a No-Brainer


U.S. Metro

Cost of Buying vs. Renting (%), Summer 2013

Cost of Buying vs. Renting (%), Summer 2012

Mortgage Rate Tipping Point When Renting Becomes Cheaper Than Buying, Summer 2013


Detroit, MI





Gary, IN





Memphis, TN-MS-AR





Cleveland, OH





Kansas City, MO-KS





Note: Negative numbers indicate that buying costs less than renting. For example, buying a home in Detroit is 65% cheaper than renting in 2013. Trulia’s rent vs. buy calculation assumes a 4.8% 30-year fixed-rate mortgage with 20% down, itemizing tax deductions at the 25% bracket, and 7 years in the home.


Should You Be Renting or Buying A Home?
Trulia’s new Rent vs. Buy Calculator provides house hunters with an easy-to-use tool to help figure out whether they should rent or buy a home. Applying the same math behind the Rent vs. Buy Report, the calculator allows consumers to enter in actual prices and rents for homes they are considering, along with the mortgage rate they qualify for, their tax bracket, and how long they plan to live in the home. They can also change other assumptions such as annual maintenance and insurance costs. To start calculating whether it is cheaper to rent versus buy, go to


  • “While it’s hard to believe after the recent spike in mortgage rates, it’s still more than one-third cheaper to buy a home than to rent,” said Jed Kolko, Trulia’s Chief Economist. “Recent mortgage rate and home price increases have made buying significantly more expensive than last year, but not enough to tip the math in favor of renting.  This is because rates remain well below historical norms, and prices are still slightly undervalued, too.”


  • “If mortgage rates rise above 5 percent, the first housing markets to tip in favor of renting would be San Jose, San Francisco, and Honolulu,” said Jed Kolko, Trulia’s Chief Economist. “Nationally, however, mortgage rates would have to reach into double-digits before renting becomes cheaper than buying, and even at 20 percent, buying would still be on par or cheaper than renting in Detroit, Gary, and Cleveland.”


  • Interactive Rent vs. Buy Map illustrating how mortgage rates, tax deductions, and number of years in the home can affect the rent vs. buy decision
  • Rent vs. buy cost considerations for the 100 largest U.S. metros: (PDF) or (Excel)


Trulia (NYSE: TRLA) gives home buyers, sellers, owners, and renters the inside scoop on properties, places, and real estate professionals. Trulia has unique info on the areas people want to live that can’t be found anywhere else: users can learn about agents, neighborhoods, schools, crime, commute times, and even ask the local community questionsReal estate professionals use Trulia to connect with millions of transaction-ready buyers and sellers each month via our hyperlocal advertising services, social recommendations, and top-rated mobile real estate apps. Trulia is headquartered in downtown San Francisco. Trulia is a registered trademark of Trulia, Inc.        


[1] Mortgage Bankers Association (MBA)