Even thought mortgage rates are slightly higher, buying is still 35% cheaper than renting in the top 100 largest metro cities.

How?  When prices and rates are rising?  Because both home prices and mortgage rates are rising a very low levels and are still below the long-term historical lows.   There are a few markets - San Francisco, San Jose and Honolulu - that are close to the tipping point where renting may become cheaper.

Mortgage rates the last 40+ years

 

To figure out the options of buying versus renting, first do the math:

1) Compare IDENTICAL properties for sale and for rent and come up with an average price.

2) Compare the initial costs of owning versus renting (taxes, insurance, maintenance).

3) Estimate the future monthly costs of owning versus renting (rent increases and inflation).

4) Add in one-time costs such as closing costs, down payment, security deposits and sales proceeds.

5)  Calculate the net present value to account for the opportunity cost of money.

Assuming a 4.8% mortgage rate, 30 year fixed loan with 20% down, itemized federal tax deductions, a 25% tax bracket and you stay in your home for 7 years, buying is 35% cheaper than renting.

 

Buying versus renting is not just about the numbers.  Both owning and renting has advantages.  Owning gives you more control over your home, what you can do with it and is an investment.  Renting gives you more flexibility to change locations and time that would otherwise be spent taking care of a home, and allows for investing in other areas. 

The information for this blog was referenced from Trulia Trends.  www.trulia.com/trends/2013/09/rent-vs-buy-summer-2013/

 

 

Tom Townsend, Broker, SRES

Denise Townsend Group

Keller Williams Sunset Corridor

1915 NW Amberglen Pkwy #250

Beaverton OR 97006

503-504-3961