Aug 27, 2014 at 2:40 PM
Is it cheaper to buy a home or rent a home in the United States?
Trulia, an online real estate site, recently released a study that shows it’s 38 percent cheaper, on average, to buy a home than it is to rent a home.
“Buying a home remains cheaper than renting in all of the 100 largest metro areas,” said Jed Kolko, chief economist for Trulia. “Even though prices increased sharply in many markets over the past year, low mortgage rates have kept homeownership from becoming more expensive than renting”
In the Toledo housing market, for example, it’s 66 percent cheaper to buy versus rent, while in the Cleveland market it’s 56 percent cheaper.
Homes in popular, marketable areas can fetch more money, and there’s high demand for lower-priced homes in these places. In Honolulu, it’s 5 percent cheaper to buy than it is to rent, while in San Jose, Calif., it’s about 9 percent cheaper.
To reach its conclusions, Trulia calculated the average rental price and for-sale price for an identical set of properties, based on homes listed on its site from December 2013 through January 2014 in similar neighborhoods.
Analysts then calculated the initial total monthly cost of owning and renting, including the mortgage payment and rent, as well as maintenance, insurance and taxes. They also figured the future total monthly costs for renters and owners, taking into account such factors as appreciation and inflation.
Trulia also factored in one-time costs and proceeds, such as closing costs, down payment, sales proceeds and secure deposits.
Local realtor Jeff Berquist generally agrees with the report — purchasing can indeed be cheaper than renting, although it’s not as simple for some people as the report would make it appear. “It is possible for a renter with a down payment and with an acceptable credit score to purchase a home at equal to or less than a similar house,” Berquist said.
But there are variables, such as neighborhoods and financing, that must be considered case-by-case, he said.
The American dream of owning a home is alive, said Jamie King, another local realtor.
“However, there may be some shift as to who values homeownership” King said.
King is finding more and more young people in their mid 20s, eager to buy their first home.
And it’s not just young couples — it’s young singles, too. For a long time, it seemed as though the typical homebuyer’s age was somewhere in the low to mid 30s, King observed.
“I’ve found there are many young buyers waiting for a home to buy,” King said. “Unfortunately, our inventory of homes on the market in the ‘affordable’ range is depressed, so it’s a waiting game to find the right home”
In the city of Sandusky, there are approximately 148 homes for sale, priced at $150,000 or less, King said. In comparison, in the same price range there are just 37 for sale in Perkins Township and 26 in the city of Huron and Huron Township.
In the $150,000-and-less price range, there are more buyers than homes.
In Sandusky, 30 percent of the homes up for sale, under $150,000, are priced at $50,000 or below. Many are major fixeruppers, so it’s hard to find a buyer for them.