Buying A Home Is Cheaper Than Renting

According to a new analysis from Trulia, homeownership is cheaper than renting in all 100 of the country’s largest metropolitan areas. In fact, homeownership is now 38 percent cheaper than renting nationally, which is an improvement over last year when buying was just 35 percent more affordable than rent. Falling mortgage rates are among the chief reasons for this widening gap. Average rates are now significantly lower than they were last year at this time. In addition, rent has been rising faster than home prices due to high demand among young adults who are ready to establish households of their own but aren’t able to afford the necessary down payment. Down payments, however, are a chief factor in determining what is more affordable between buying a home and renting. For example, buying a home with a smaller down payment makes homeownership less favorable financially due, in part, to the fact that less money down means a higher monthly mortgage payment. Trulia’s calculations are based on a traditional 30-year fixed-rate mortgage with a full 20 percent down payment. More here.

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