It's the classic battle: Should I buy a home or keep renting?
If you're leaning toward remaining a renter, consider this current statistic:
In the United States, buying a home averages 37.7% cheaper than renting.
Trulia's Rent vs. Buy Report analyzed 100 metropolitan housing markets and compared the cost of owning a home over a seven-year period (with 20 percent down payment) to the bottom line for renting over that same time frame. In late 2016, the margin between the two choices actually widened a bit over the previous year's average of 37.2% and reflected the widest gap since 2012, when buying averaged 40.7% less expensive than renting.
The cost comparison takes into account median home value and rent, including mortgage payments, maintenance, insurance, and taxes, plus one-time costs such as closing costs, down payment, sale proceeds, and security deposits.
Housing markets like Miami and Fort Lauderdale proved to homebuying to be a staggering 50% cheaper than renting. In Miami, for example, the median home price in the fall of 2016 was $259,527. A house rental averaged $2,000 per month.
Even in the markets where the margin was slimmer, the report showed that buying still held a significant advantage. Honolulu showed the smallest variation with a 17.4% savings for homebuyers over renters, followed by San Jose, CA, with 18.6%.
Home prices are rising at an average of 5.9%, with rents increasing at about 3.5%%. Low mortgage rates have enticed many renters to become homebuyers. Even with rising home prices, the value of homeownership presents a strong investment. According to the report, mortgage rates would have to make major gains--as much as 5% higher--to offset the homebuying advantage.
According to the Trulia report, "The FOMC (Federal Open Market Committee) has only raised rates once in the past 10 years, and prices would have to grow to their tipping [point] with little movement in rents--the latter of which hasn't happened since the housing market recovery began in 2012."
Need more convincing? Trulia's Rent vs. Buy calculator to see a comparison with your specific parameters (e.g., housing market, rent, target home price, mortgage interest rate).
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