Tag Archives for " Renting "
Based on Trulia’s recent Rent Versus Buy Report, homeownership continues to be a cheaper option than renting with a traditional 30-year fixed rate mortgage in all the 100 largest metropolitan areas in the United States.
The report shows that buying a home is actually 38 percent cheaper than renting, which is slightly higher from last year’s rate of 35 percent. The baseline model comprises of a 20 percent down payment 30-year mortgage, 25 percent tax deductions, and the homeowner living there for seven years.
According to Trulia, there are two reasons with the widening gap. First, the 30-year fixed-rate mortgage rate has dropped from 4.8 percent to 4.3 percent in the past year. Second, rental prices have increased faster than home prices, excluding foreclosures. The combination of these trends makes home buying more affordable than renting.
The gap between the costs of buying a home and renting varies across the different metros since each market has their own prices and rents. Plus, property taxes and home price appreciation differ from place to place. Taking all these factors into consideration, buying ranges from 17% cheaper than renting in Honolulu to 63 percent more affordable than renting in Detroit.
Another interesting fact in Trulia’s report is that renting may be favorable in some markets next year if home prices continue to increase at a greater rate than rental prices, and if mortgage rates rise due to the strengthening economy, with the latter being expected by most economists.
Furthermore, nationally, home-buying rates would need to jump at 10.6 percent for renting to become more affordable that buying. However, such rate hasn’t been reached since 1989.
Generally speaking, buying a home remains to be a more sensible choice than renting since rental rates have inflated at a higher rate.
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According to the newest analysis from Zillow, the number of American adults moving in together so they could share the expenses as rental rates continue to go up is increasing.
Since 2012, approximately 32 percent of adults have been living together in one household wherein one or more working adults (23 to 65 years old) are living in one roof but are not married or partners. Doubled-up households have steadily increased over 10 years from 25.4 percent in 2000, 27.4 percent in 2006, to 30.8 percent in 2010, and 32% in 2012.
Such increase correlates with the increasing rental rates, which has become unaffordable across the country. In fact, this has been the highest rental rates ever wherein 30 percent of the national median income ($53,216) will be spent on rents. Instead of moving to a small rental space or to a much affordable area, a lot of individuals are opting to live with someone.
At present, Los Angeles tops the list of the metros with the highest number of doubled-up households with 47.9 percent followed by Miami (44.5 percent), New York (42.5 percent) and San Diego (39.7 percent). Moreover, these metros are also the places with the most expensive places to rent.