Dwelling dilemma

Buying a house can be cheaper than renting
Melissa Topey
Mar 17, 2014

 

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.

Comments

LadyC

Getting a mortgage loan can be pretty challenging as well. A lot of people in Sandusky are part-time, seasonal, or temporary workers. And if they have student loans, that factors into the debt-to-income ratio, and kicks more of them out. I sure hope things improve for these young people.

capcap

"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." Yup with (acceptable credit score) is the key word here. With people job loss and loosing everything..How can I have a good credit score??? They don't count Job Loss when doing your credit scores.

thinkagain's picture
thinkagain

Some people are content to rent year after year with nothing to show for it. They basically have one monthly payment and can just call the landlord when something needs fixing or replaced.

I think back with fondness to the carefree days before I became a landlord.

Being a landlord is similar to reading SR comments, both can test your faith in humanity…

SamAdams

That's only true if you're a DECENT landlord. I'm not accusing you of being indecent -- in fact, you strike me as likely to be the kind of responsible landlord all OUGHT to be -- but the bad landlords seem all too common in this area.

I do a lot of walking around residential areas, and you can often tell the rentals simply by the poor condition the homes and yards are in. Piles of trash in backyards, unshoveled sidewalks/unmowed grass, dangling gutters, broken porch steps, etc.

I recognize that this is often the fault of bad tenants, which then prompts me to ask: Why aren't bad tenants easier to evict? It would save neighbors tons of headaches, and landlords a lot of money in the end if bad tenants could just be kicked out!

SamAdams

There was a government program some time ago that granted down payment dollars so that people who didn't have the money could buy a house. The biggest problem with the program was that only low income people qualified. In other words, people who, once they HAD a house, couldn't afford to KEEP it (or upkeep it, either).

At the time, I spoke with City officials and suggested a program to help lower middle class people would be a better one. I'm not a big fan of government giveaways for ANY reason, but if they're going to do it, it ought to at least be a potentially GOOD investment rather than throwing good money after bad!