In the long run, its cheaper to buy a home than to rent. This is nothing new, but right now, it’s a lot cheaper. According to a recent Forbes article, the cost of homeownership is 38% less than being a renter.
According the Trulia’s Winter 2013 Rent vs. Buy Report, a mortgage is still a greater value than shelling out the monthly rent for a house, based on the current 30-year fixed rate of 4.5%. Trulia studies 100 metropolitan markets twice a year and says that even though housing prices are creeping back up, you’re still paying too much to live in a place that isn’t your own.
You might be thinking, “Well, of course, Trulia wants you to buy a house.” But the organization followed a careful model to come to this conclusion. They estimated prices and rents for comparable homes in similar neighborhoods, not just some broad estimation.
You can do the math yourself by calculating the monthly costs of rent/mortgage, plus maintenance, insurance, and taxes. Be sure to consider annual rent increases. Also include one-time expenses, like down payment, closing costs, or security deposit. Or use Trulia’s Rent vs. Buy Calculator.
The 38% figure varies from one market to another. Some cities, like San Francisco and Seattle, are seeing big rent hikes. However, housing prices are also higher there, so the margin between buying and renting is smaller—but still significant.
Before you decide about making the move to homeownership or waiting it out in a rental, check out Trulia’s complete report.