Buying a House 35% Cheaper Than Renting in the Largest Metro Areas
The decision to buy a home or rent is a hotly debated topic – both a personal and a financial decision. Financially, however, Trulia found that in the 100 largest metro areas, buying was significantly cheaper than renting.
On average, buying is 35% cheaper than renting, up from 33% last year. In some regions, especially in the south, it is more than 50% cheaper to buy. However, in other regions, especially California and Hawaii, buying a home can be more challenging, as buying a home is 16 to 27 percent cheaper than renting there.
To get those numbers, Trulya looked at the homes listed for sale or rented on the site in March. They compared prices and rents for similar homes in the same area to compare the number of apples and apples.
Common homeownership costs include mortgage payments, taxes, closings, maintenance, and insurance. General rental costs include the renter’s insurance and security deposit. They also took into account the opportunity cost of using money to buy a home instead of investing it and suggest that a 30-year fixed-rate loan would have a 3.87% rate. You can see the full methodology in PDF format here .
In any case, all things considered, they believe that in the largest parts of the country, buying is cheaper than renting for a seven-year period.
However, there are many variables to consider, so you can play around with Trulia’s interactive Rent and Buy Map to get a clearer picture of where you live.
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