Study: Buying a Home Is 44 Percent Cheaper Than Renting

Trulia’s new “Rent vs. Buy” report shows that, despite rising property prices, purchasing a home is 44 percent less expensive than renting. Researchers studied the 100 biggest U.S. metropolitan areas and concluded that homeownership is the more economic option in all of them. The 44 percent figure assumes that the buyer has contributed a 20 percent down payment, will remain in the residence for at least seven years, itemizes deductions at the 25 percent tax bracket, and has a 3.5 percent interest rate on a 30-year fixed mortgage. Trulia chief economist Jed Kolko noted that the biggest discount currently is in Detroit, where buying is a whopping 70 percent cheaper than renting. The smallest was measured in San Francisco, where buying is only 19 percent more cost-efficient than renting. According to Kolko, buying will probably not look as good after next year’s research is concluded because prices are on pace to climb faster than rents and because mortgage rates likely are headed up. | Read More