Buying or Renting?
Home prices have taken such a beating and demand for rental units has increased so much that it’s now cheaper to buy a two-bedroom home than to rent one in most major U.S. cities. According to real estate web site Trulia, buying is cheaper than renting in 74% of the country’s 50 largest cities. In just 12% of the cities, including New York, Seattle, and San Francisco, renting is cheaper. In the remaining 14%, renting is less expensive but close to the cost of buying.
Las Vegas offered the most compelling buy-side math. Prices there have plunged more than 59% from their August 2006 peak, according to the home price index. Detroit is another metro area where buying is better. The median price for a condo or townhouse is about seven times annual rent. Home prices in Mesa, Arizona, and Fresno, California also clock in at the same rate.
Arlington, Texas, Sacramento, California, Phoenix, Arizona, and Jacksonville, Florida all had buy-rent ratios of eight.
Bottom line: if you have a steady job and you’re planning to stay for seven years or more while having enough cash to put down 20% and enough left over for seven or eight months of expenses, you’re better off buying in most places!