Homeownership 45 Percent Cheaper Than Renting Nationally, Reports Trulia
Trulia Research Reveals How Mortgage Rates, Tax Deductions and Time Horizon Affect Rent vs. Buy Decision in New York, Los Angeles, Boston and Atlanta, Among Other Metros
(firmenpresse) - SAN FRANCISCO, CA -- (Marketwire) -- 09/13/12 -- today released its Summer 2012 Rent vs. Buy Report, which provides the inside scoop on whether is more affordable than in America's 100 largest metropolitan areas. Looking at homes for sale and for rent on Trulia between June 1, 2012 and August 31, 2012, this study compares the average cost of renting and owning for all homes on the market in a metro area, factoring in all cost components including transaction costs, taxes and opportunity costs.
With a 3.5 percent mortgage, itemized deductions at the 25 percent federal tax bracket, and a seven-year time horizon, homeownership is cheaper than renting in all of the 100 largest U.S. metros by a wide margin. However, relative affordability depends largely on location. Buying a home is 24 percent cheaper than renting in , 28 percent cheaper in , and 31 percent cheaper in , but is 70 percent cheaper in . However, the actual dollar amount reveals that despite a low 28 percent difference in buying versus renting in , the monthly dollar savings is big ($899) because rents and prices are so high in this region.
Note: Cost of assumes that the home is sold after 7 years and includes closing costs, maintenance, insurance, property taxes and other costs. Cost of includes security deposit and renters insurance. Monthly costs are based on net present value of costs averaged over 7 years, and based on the average across all properties listed in the metro area, including those for sale and those for rent, in summer 2012.
For prospective homeowners who are unable to secure the best , fail to itemize their tax deductions or plan to stay in their next home fewer than seven years, the cost of homeownership relative to renting will be greater. The chart below illustrates how each of these factors can change the cost considerations in favor of renting or buying. In the metro area, a , not itemizing one's tax deductions and staying in a home for 5 years, will make homeownership 3 percent more expensive than renting, instead of being 31 percent cheaper. Meanwhile, remains 40 percent cheaper than renting in Atlanta, even with the higher , not itemizing and shorter time horizon.
*For these scenarios, the factors not mentioned are the same as the baseline.
"Homeownership is cheaper than renting in all of the 100 largest metros, by a wide margin," said Jed Kolko, Trulia's Chief Economist. "Despite the recent price rebound, rents continue to rise faster than prices, and are near record lows. Homeownership makes the most financial sense for people whose strong credit scores let them snag the and who get the biggest benefit from deducting mortgage interest and property taxes from their income taxes."
"If buying a home is cheaper than renting in every major metro and makes financial sense in most situations, then why aren't more people buying? The reason is because many people can't take advantage of today's affordability," said Jed Kolko, Trulia's Chief Economist. "It takes years to save enough for a down payment, and it takes a high credit score to even qualify for a , let alone to get the best rate. In the recession, many people found it harder to save -- and harder to keep up their credit scores."
To view an interactive map illustration how mortgage rates, tax brackets and timing horizon can impact the rent vs. buy decision, click .
To view a full list of the rent vs. buy cost considerations for the 100 largest metros, click .
Trulia looks at homes for sale and for rent and calculates the average rent and sale price across all listed properties in a metro area. Then, Trulia factors in the total costs of homeownership (e.g., closing costs, maintenance, insurance, taxes, etc) and total cost of renting (e.g., renter's insurance and security deposit). It assumes that a prospective homebuyer can get a low mortgage rate of 3.5 percent, itemize their federal tax deductions and are in the 25 percent tax bracket, and will stay in their home for seven years. To account for the opportunity costs, Trulia calculates the net present value of the payment streams for renting and owning. Click to read the full methodology.
gives home buyers, sellers, owners and renters the inside scoop on professionals. Trulia has unique info on the areas people want to live that can't be found anywhere else: users can learn about agents, neighborhoods, schools, and even ask the . use Trulia to connect with millions of transaction-ready buyers and sellers each month via our hyper local advertising services, social recommendations and . Trulia is headquartered in downtown San Francisco and is backed by and . Trulia is a registered trademark of Trulia, Inc.
Daisy Kong
415.400.7391
Themen in dieser Pressemitteilung:
Unternehmensinformation / Kurzprofil:
Datum: 13.09.2012 - 12:00 Uhr
Sprache: Deutsch
News-ID 183048
Anzahl Zeichen: 0
contact information:
Town:
SAN FRANCISCO, CA
Kategorie:
Personal Finance
Diese Pressemitteilung wurde bisher 306 mal aufgerufen.
Die Pressemitteilung mit dem Titel:
"Homeownership 45 Percent Cheaper Than Renting Nationally, Reports Trulia"
steht unter der journalistisch-redaktionellen Verantwortung von
Trulia (Nachricht senden)
Beachten Sie bitte die weiteren Informationen zum Haftungsauschluß (gemäß TMG - TeleMedianGesetz) und dem Datenschutz (gemäß der DSGVO).
