In the latest Rent vs. Buy Report from Trulia, they explained that homeownership remains cheaper than renting with a traditional 30-year fixed rate mortgage in the 100 largest metro areas in the United States.
The updated numbers actually show that the range is an average of 5% less expensive in Orange County (CA) all the way up to 46% in Houston (TX), and 36% Nationwide!
Other interesting findings in the report include:
- Interest rates have remained low and even though home prices have appreciated around the country, they haven’t greatly outpaced rental appreciation.
- Some markets may tip in favor of renting if home prices increase at a greater rate than rents and if – as most economists expect – mortgage rates rise, due to the strengthening economy.
- Nationally, rates would have to rise to 10.6% for renting to be cheaper than buying – and rates haven’t been that high since 1989.
Buying a home makes sense socially and financially. If you are one of the many renters out there who would like to evaluate your ability to buy this year, meet with a local real estate professional who can help you find your dream home.
Keeping Current Matters
Insightful article by Myles Udland, recently published in the Business Insider.
With inventories down and supply tight — as of February the outstanding stock of existing homes would only last 4.4 months at the current selling rate — the lowest price points in the market are being disproportionately affected, preventing millennials from buying homes and pushing up rent inflation.
In commentary published Monday, Ralph McLaughlin, chief economist at Trulia, noted that inventory for both starter homes and trade-up homes — the two lowest price brackets in the housing market — is down about 40% in the last four years.
Overall, the total number of homes sitting on the market is down to around 860,000, down from 1.4 million 2012.
In short, the US housing market is facing a severe lack of supply that will either be resolved by higher prices (and more inflation) or more building.
A great blog post from Keeping Current Matters!
With residential real estate values rising quite substantially in most parts of the country over the last few years, many homeowners are seeing a major increase in their family’s wealth as equity continues to build in their house. A recent study
by the Joint Center of Housing Studies at Harvard University
revealed that home equity grew nicely last year and has grown dramatically over the last five years…
Buyers looking today may not see the same build-up in equity but could still do quite well. Let’s assume you went into contract in the next six weeks and closed on a $250,000 home in January. If we take the house value projections from the last Home Price Expectation Survey
, here is how your equity would grow over the next four years:
Homeownership has historically been a great way for the average American family to build wealth over time.