Unless you're planning to move again soon, buying a home is a
better deal than renting in most of the United States, according to
a new analysis.
In more than three-quarters of U.S. metropolitan areas, a person
seeking a new residence is better off buying a home rather than
renting unless they plan to move again within three years,
according to a recent market analysis by Zillow.
The study takes into account a broad range of costs associated
with either buying or renting, including down payments, mortgage or
rental payments, property taxes, tax deductions, maintenance costs,
utilities and the like. It also makes assumptions about the rate of
inflation, and anticipated changes in rental costs and home
values.
"Across most of the country, historic levels of affordability
make buying a home a better decision than ever, especially
considering rents have risen more than 5 percent over the past
year," said Stan Humphries, Zillow chief economist. ""This is the
first analysis of metros and cities that presents the buy versus
rent decision in an intuitive way, by telling consumers how long
they must live in the home before buying breaks even with renting
financially."
In some areas that were particularly hard-hit by the housing
downturn, a homebuyer could "break even" versus renting in two
years or less, according to the study. Among the most favorable was
the Miami-Ft. Lauderdale area, where a typical homebuyer should
reach the break-even point in only 1.6 years.
By contrast, renting tends to become more attractive in areas
with higher home values. In the San Jose, Calif. metropolitan area,
a typical home purchaser would need to own the property for 8.3
years to show a financial advantage over renting; in the Melo Park
suburb south of San Francisco, the break-even point is 14.1
years.
Of the 224 metropolitan areas covered by the study, only 7
percent required more than five years for a homeowner to reach the
break-even point. Many of the communities with the longest
break-even points were located in California, where prices in many
cities have rebounded over the past few years.
First published at:
http://www.mortgageloan.com/buying-cheaper-renting-most-9194