To Rent or Buy? That is a tough question. Trulia just came out with a report that gives some insight to answer this question. Spoiler alert, it is almost always better to buy rather than rent – see why…
They took someone looking to buy or rent for 7 years to see if it would be cheaper to rent or buy. Now if you have read our post called Looking to Gain Wealth you will see that 7 years could get you around $91k of equity if you bought a $200,000 home, but they didn’t factor into that. This report they came up with was just the idea of your payment.
So what did they find? Buying is better! The range is from an average of 16% in Honolulu (HI), all the way to 55% in Sarasota (FL), and 35% Nationwide!
As you see, if you aren’t color blind, Utah’s real estate market puts us in the 20-40% cheaper category. This means if you look to buy a house in Utah would would pay less than if you rented that same house.
The other interesting findings in the report include:
- Interest rates have remained low and even though home prices have appreciated around the country (3.9%), they haven’t greatly outpaced rental appreciation (3.7%). “In the past year, these two trends have made homeownership even more affordable compared with renting.”
- Some markets might tip in favor of renting if home prices increase at a greater rate than rents and if – as most economists expect – mortgage rates rise, due to the strengthening economy.
- Nationally, rates would have to rise to 10.6% for renting to be cheaper than buying – and rates haven’t been that high since 1989.