According to Trulia’s 2013 Rent vs. Buy Report, buying is cheaper than renting in the top 100 metro areas across the nation says Forbes. While asking home prices climbed 7.0 percent last year, rent went up by 3.2 percent. Currently, it is 44 percent cheaper to buy versus rent, compared to 46 percent one year ago. Low mortgage rates have contributed to housing affordability. Households can save more dollars buying over renting in the Midwest than in San Francisco, Honolulu, San Jose, and New York, where the savings gap is narrower.
Buying is a great option when these key factors apply:
- Low-interest mortgage rates are available;
- Households itemize deductions on tax returns, including the mortgage interest and property tax payments for first and second homes;
- Households stay in the home three years or longer, because buying and selling a home incurs settlement or closing costs that may be recouped after that period.
Buying is 44 percent lower than renting for families that stay for 7 years, 35 percent for those staying 5 years, and 20 percent for 3-year inhabitants.
The Bipartisan Policy Center forecasts that five to six million new renter households will emerge over the next decade due in part to the low inventory of homes, according to HousingWire. Barry Zigas, Director of Housing Policy for Consumer Federation of America, said that even though young households want to purchase, the current housing supply can’t support that demand. Tighter credit, more substantial down payments, and decreased wealth among new households also contribute to the rise in rentership.
A research study from Florida International University concludes that the U.S. is trending toward becoming a renter nation even though the financial and non-financial benefits of homeownership are still tangible for many households. While buying is a good option for most, it is particularly positive for those who plan on staying in a home for more than three years or who are looking for rental properties to grow their wealth over time.