04 Apr Is Buying Cheaper Than Renting?
With the market seemingly recovering, the cost of rental homes is rising. Is it smarter to buy or rent? A new study indicates that in 98 out of 100 U.S. housing markets, buying may actually be the more affordable option.
According to data from the real estate site Trulia, the only metropolitan areas where it still makes more financial sense to rent rather than buy are San Francisco and Honolulu.
Why is buying dramatically less?
High vacancy rates and land to spare indicate that prices are unlikely to improve much in some areas. It’s unlikely that certain markets reach the rule of thumb where renting makes more sense: if buying is 15 or more times more expensive than renting.
In contrast, qualifying for a mortgage isn’t as easy as it was in the past, making potential buyers skittish when it comes to pulling the trigger. The job market isn’t as stable as the return of real estate, so many also prefer to keep renting because they don’t want to tied to a mortgage.
With these numbers, what is the end result? People aren’t buying affordable single-family homes. Believe it or not, there has been a recent increase in construction of multi-family housing for… you guessed it: more rentals.
What do you think? Why aren’t people buying now? What would it take to convince them?