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.
Study Again Finds Homeownership to be a Better Way of Producing Wealth
Keeping Current Matters wrote this great article
According to the latest Beracha, Hardin & Johnson Buy vs. Rent (BH&J) Index homeownership is a better way to produce greater wealth, on average, than renting. The BH&J Index is a quarterly report that attempts to answer the question:
Is it better to rent or buy a home in today’s housing market?
The index examines the entire US housing market and then isolates 23 major markets for comparison. The researchers use a “’horse race’ comparison between an individual that is buying a home and an individual that rents a similar quality home and reinvests all monies otherwise invested in homeownership.” Ken Johnson Ph.D., Real Estate Economist & Professor at Florida Atlantic University, and one of the index’s authors states:
“The nation as a whole is in buy territory. Continued near record low mortgage rates, unsteady stock market performance, and rents (on average) now out pacing the cost of ownership (maintenance, taxes, insurance, etc.) all combine to favor owning and building wealth through home equity over renting and reinvesting in a portfolio of stocks and bonds.”
Dallas, Denver and Houston currently remain deep in rent territory but, “there is some degree of good news from these markets for homeowners as the cost of renting is now increasing at a faster rate than the cost of homeownership — reducing the advantage of renting over buying.”
Buying a home makes sense socially and financially. Rents are predicted to increase substantially in the next year, so lock in your housing cost with a mortgage payment now. To Find Out More About the Study: The BH&J Index and other FAU real estate activities are sponsored by Investments Limited of Boca Raton. The BH&J Index is published quarterly and is available online at http://business.fau.edu/buyvsrent.