Owning a home is still vastly less expensive than renting, netting Americans nearly 40% in savings among those who own their homes versus renting, according to online real estate hub Trulia.
Nationally, and in all of the 100 largest metro areas, homeownership remains cheaper than renting, Trulia’s chief economist writes in a recent blog post, with rising mortgage rates and home prices narrowing the gap in the last year.
Buying today is 38% cheaper than renting on a national basis today, Trulia finds, versus being 44% cheaper a year ago.
Geographically, the gap varies, however, with homeownership being just 5% cheaper than renting in Honolulu and as high as 66% cheaper than renting in Detroit.
Trulia also calculated “tipping points” at which the mortgage rate will make ownership more expensive. In Orange County California, for example, at today’s values that tipping point is 6.8%, whereas in Cleveland, it’s nearly 21%.
“Will renting become cheaper than buying soon?” Trulia asks. “Some markets might tip in favor of renting this year as prices continue to rise faster than rents and if – as most economists expect – mortgage rates rise, due both to the strengthening economy and Fed tapering.”
Written by Elizabeth Ecker