Rent or Buy? The Trend of Real Estate Market
Property costs have taken such a beating and demand for rental units has increased a great deal that it's now less expensive to own than to rent a two-bedroom home in most major U.S. cities.
Based on online real estate site Trulia, buying was less expensive than renting in 74 percent among the country’s 50 largest cities in July. In barely 12 percent of the cities, including New York, Seattle and San Francisco, renting was cheaper. Within the remaining 14 percent of cities, renting was less costly but close to the expense of buying.
In addition to a continuing decline in home prices, low interest rates have added lots of weight to the buy side of the scale. Include the tax perks of home ownership as well as people that can pay for it and may also actually be qualified for financing, it definitely is a buyer’s market.
Las Vegas offered the most convincing buy-side math, Trulia’s survey found, with prices there plunging more than 59 percent off their August 2006 peak. The median cost of a two-bedroom, two-bath condo or townhouse is around$60,000, a ratio of just six times the median annual rent of a similar rental apartment, which happens to be$9,700.
Monthly mortgage payments on a median-priced Las Vegas condo would come to $256 with a 30-year, 5-percent interest loan. Even factoring in property taxes and common charges of roughly $300 monthly, the monthly amount remains below the $810 in monthly rent they can pay using a similar place.
Detroit, based on Trulia, is an additional metro area where buying is better. The median price for a condo or townhouse is about seven times annual rent. Home prices in Mesa, Arizona., and Fresno, Calif., also clock in at seven times rent.
Arlington, Texas, Sacramento, Calif., Phoenix and Jacksonville, Fla., all had buy-rent ratios of eight.
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