When is Owning Better Than Renting?

 

Rent or Buy a House

When is owning better than renting?

According to a new analysis by Zillow, buying is a better financial decision than renting for most buyers who intend to live in a home for at least three years.

Zillow analyzed the “breakeven horizon” in more than 200 metropolitan areas and 7,500 U.S. cities to determine how many years it would take before owning a home becomes more financially advantageous than renting the same home. In more than 75 percent of the metro markets analyzed, a homeowner would break even after three years or less of owning a home.

All possible costs associated with buying and renting were incorporated into the analysis, including downpayment, mortgage and rental payments, transaction costs, property taxes, utilities, maintenance costs, tax deductions and opportunity costs, while adjusting for inflation and forecasted home value and rental price appreciation.

In some metro areas where home values fell dramatically during the housing recession, homebuyers break even after less than two years of owning a home. The Miami-Ft. Lauderdale metro is among the most favorable for buying, with homeowners breaking even after only 1.6 years of living in the home. However, in the San Jose metro area, where home values are among the highest in the nation, a buyer must commit to living in their home for 8.3 years before they will break even.

“Across most of the country, historic levels of affordability make buying a home a better decision than ever, especially considering rents have risen more than five percent over the past year,” said Stan Humphries, Zillow chief economist. “This is the first analysis of metros and cities that presents the buy versus rent decision in an intuitive way, by telling consumers how long they must live in the home before buying breaks even with renting financially. It’s much more understandable, and therefore useful, than the abstract notion of a simple ratio of prices to rents. If we want consumers to act on market information, we have to align it with how they think about the issue and make it straight-forward to grasp.”

Original Sources: Zillow, Forbes

Are you looking to make the leap from renting to home ownership? Here are some additional links regarding the benefits of home ownership that you may find useful:

Are you ready to discuss your home financing options with a licensed mortgage professional? Contact an Inlanta Mortgage loan professional near you.

Inlanta Mortgage offers Fannie Mae/Freddie Mac agency products,  as well as a full suite of jumbo and portfolio programs. The company is  fully delegated HUD-FHA including FHA 203K, VA, and USDA approved.  Inlanta Mortgage also offers numerous state bond agency programs. Review Inlanta’s mortgage loan programs here.

Inlanta Mortgage is a multi-state mortgage banker based out of Brookfield, Wisconsin. NMLS# 1016. Inlanta Mortgage is proud to be a recent recipient of a 2012 Top Workplace Award.

Rising Rent Prices Expected

Rent or Buy

73% of people think now is the time to buy.

According to Fannie Mae’s March 2012 consumer attitudinal National Housing Survey, several key housing market indicators point to increasing numbers of home purchases. Why? Americans now expect both home and rental home purchase prices to increase over the next year.

“Conditions are coming together to encourage people to want to buy homes,” said Doug Duncan, vice president and chief economist of Fannie Mae. “Americans’ rental price expectations for the next year continue to rise, reaching their record high level for our survey this month. With an increasing share of consumers expecting higher mortgage rates and home prices over the next 12 months, some may feel that renting is becoming more costly and that homeownership is a more compelling housing choice.”

Rates remain low and home prices are on the rise. Inlanta Mortgage loan officers are here to help you evaluate if now is the time to become a homeowner. Our mortgage professionals understand that the decision to purchase a home is often the most important financial decision you will ever make and can help you make rent versus buy calculations. Click here to find a licensed mortgage loan officer near you.

Here is some of the raw data availalbe in the March 2012 Monthly National Housing Survey conducted by Fannie Mae:

  • 33% of respondents expect home prices to increase over the next 12 months – up 5% percentage points from last month
  • On average, Americans expect home prices to increase 0.9% over the next 12 months
  • 39% of Americans expect mortgage rates will go up in next 12 months
  • 73% of respondents believe now is the time buy a home – up 3 percentage points from last month
  • the number of respondents saying it’s a good time to sell also increased one percentage point from last month
  • 48% of respondents expect home rental prices to increase in the next 12 months. In fact,  respondents expect home rental prices to increase by 4.1% over the next 12 months – the highest recorded number to date

Access the March 2012 National Housing Survey Data Release click here.

Whether you are ready to make the leap to home ownership or not, it is never too early to begin learning about the process. Explore our other blog posts on the Home Buying Process here.  Learn why home ownership matters, why you need to get pre-approved for a mortgage before shopping and much more!

Inlanta Mortgage offers Fannie Mae/Freddie Mac agency products, as well as a full suite of jumbo and portfolio programs. The company is fully delegated HUD-FHA including FHA 203K, VA, and USDA approved. Inlanta Mortgage also offers numerous state bond agency programs. Review Inlanta’s mortgage loan programs here.

Inlanta Mortgage is a multi-state mortgage banker based out of Brookfield, Wisconsin. NMLS# 1016.