After years of declining home prices and rising rents, it is now more affordable to buy a home than rent in all but two of the 100 largest metropolitan areas in the U.S., this according to the recent Rent vs. Buy Study conducted by Trulia.
Even in the supposedly expensive real estate markets such as New York, Los Angeles and Boston, homeownership was shown to be a better option than renting. The study also shows that it is cheaper to buy than rent in these Maryland metropolitan areas: Baltimore, Bethesda, Rockville and Frederick.
However, the study which was conducted between December 1, 2011 and February 29, 2012, shows that renting is a better deal than buying a home in these two metropolitan areas: Honolulu and San Francisco.
“Buying is much cheaper than renting in slow-growing places with high vacancy rates and land to spare, like Detroit and Cleveland, where prices are unlikely to improve much in the future,” said Jed Kolko, Trulia’s Chief Economist.
“As rents rise and prices stagnate, homeownership is becoming even more affordable, but rising rents create a dilemma for people who can’t afford to buy yet,” Kolko said.
“Rising rents make it harder for people to save for a down payment, which is the biggest barrier to buying a home that aspiring homeowners face,” Kolko continued.
Meanwhile, Ken H. Johnson, a professor of real estate at Florida International who has studied the buy-vs-rent question extensively, told CNN Money that the buy-vs-rent calculations are about to change as home prices nationally have bottomed.
“Markets should slowly start to recover. Housing will return to its traditional role of a safety investment,” Johnson.
If indeed, housing will go back to its traditional role as a safety investment, Les Christie of CNN Money wrote, “If so, that adds an incentive to buy. And investing in many of the most expensive markets may be even safer.”
Whether you are a first-time home buyer, first-time home seller, empty nester, thinking about selling a home or buying a home, do contact the Guldi Real Estate Group. In Southern Maryland, the Guldi Group is the number one real estate team.