Survey says buying is far cheaper than renting

There are numerous discussions that will rage on for eternity. One is whether it is cheaper to buy instead of rent a home. Real estate business Trulia, recently found in its annual survey that getting is less expensive than renting in 98 of 100 large metropolitan areas. Article resource: Survey says buying is far cheaper than renting



Some cities less expensive



Annually, real estate firm Trulia releases a survey that looks at typical rental prices and typical purchase prices of houses in the 100 largest cities to gauge whether it is cheaper to rent or to buy. In recent years, Trulia has discovered that it is cheaper to purchase as real estate values are lower as a result of effects of the recession on housing.



There are only two places out of the 100 markets looked at where it is cheaper to rent than it is to buy is in San Francisco, California and Honolulu, HI. CNN explained that most places are cheaper to purchase though.



Increase from 2011



The increase since last year was substantial, as the Trulia study in 2011 estimated it was less expensive to purchase in 75 of the top 100 metropolitan areas in mid-2011, according to Time Magazine. Real estate costs overall have been tumbling for some time, having fallen by 30 percent since 2006, according to Bloomberg.



The Wall Street Journal explained that Trulia utilizes the cost per square foot to figure out if it is less expensive to buy or to rent. The cost of a home, divided by square footage, has to be less than 15 more than the yearly rent divided by square footage for it to make more sense to buy. This is the 15 times rule that Trulia utilizes.



CNN explained that Detroit is an excellent place to purchase right now. It is 3.7 times rent to buy a home right now.



San Franciscans, according to Time, are paying 17 times rent and Manhattanites, though New York as a whole is cheaper, pay 20 times rent, according to Smart Money.



Criteria leave out just a little



It is misleading to consider the purchase price of the home without considering the cost of ownership. The price per square foot only utilizes the purchase price.



For instance, not every homeowner has property taxes rolled into the monthly mortgage payment or homeowner's insurance. There are also closing costs at the point of purchase and sale of a home, along with applicable sales taxes and financing charges charged by the bank for the mortgage. Then there are repairs and upkeep, which in most cases are not the renter's responsibility.



<a href="https://personalmoneynetwork.com/installment-loans/">Home repairs will easily cause a person to need short term installment loans to pay for them</a>



To be able to really determine if it is less expensive to rent or to purchase, you have to add up all those costs over a time frame and compare it to renting. Every individual residence needs to be considered for this to be an accurate measure because every home is going to be different.



Sources



<a href="http://moneyland.time.com/2012/03/21/housing-math-buying-is-now-cheaper-than-renting-98-of-the-time/">Time</a>

<a href="http://money.cnn.com/2012/03/21/real_estate/homes-buy-rent/index.htm?iid=SF_PF_Lead">CNN</a>

<a href="http://www.smartmoney.com/spend/real-estate/real-estate-when-high-rents-are-a-buy-signal-1331576287959/?mg=com-sm/">SmartMoney</a>