Buying Is Still Not Much Better Over Renting In Some Metros
We are just recovering from the recession which forced many homeowners to find themselves in foreclosures. The status and systems in most real estate markets across the nation are favorable for home buyers. The mortgage rates are low not to mention the loose lending standards. Trulia studied 100 markets and proved that, even though home prices are still high and they continue to rise, it’s much cheaper to buy a home than to rent in some of the states.
However, buying a home is stiff in markets such as Honolulu, San Jose, Hawaii, Lancaster, Sacramento, San Francisco, Penn and Calif. In these markets, buying offers a slight edge over renting.
“A man travels the world over in search of what he needs and returns home to find it.” ~ George Moore
Some Metros Where Buying Isn’t Much Better Than Renting
Take a case of Hawaii where it is just 16% cheaper to buy than renting a home. When other factors such as closing costs are taken into account, the rate falls to about 1%. Trulia said that the homeowners association (HOA) fee in this market is very high, making the state the second state after NYC to have high HOA fees. In California, 60% of the markets especially those located near Golden state buying has the smallest financial gain over renting.
Possible Reasons Why Tenants in These Metros Can Still Rip More
What normally deters and pushes one’s dream of owning a home further is the down payment. It’s a real hassle to save for 20% down payment. When the burden of down payment is added to the closing costs, it becomes expensive for buyers in California and Hawaii to purchase a home. The rising closing costs and home prices requirements means that buyers in these metros must have more cash to own a home. In states such as Sarasota FL, it’s 55% cheaper to buy a home over renting. But this doesn’t mean that many home buyers are rushing to buy homes mainly because they have not saved enough down payment. According to Census, the homeownership rate has fallen by 63.7% as at the first quarter of 2015.
Homeownership Rates May Not Rise At ALL in Honolulu, Lancaster & San Jose
Even though the economy now is promising, most buyers’ markets as well as sellers’ markets are still unstable. Mortgage rates are low, but if they commence rise, some markets could see a dramatic shift towards renting. Rising interest rates will attract renters into these metros as more people would find renting more affordable over buying. Trulia used estimated median home values and rent in their research and after putting everything into consideration, they found that, while most metros are zones where buying is much cheaper than renting, the converse is happening in other metros.