It Really is Cheaper to Buy vs. Rent

Since the housing bubble burst, it seems like everyone and their mother can’t stop talking about what a great time it is right now to buy a home, but how good is it really? Call Tami Winbury Keller Williams Realty DRE#01878369 www.ShortsSale.org to help you buy your next home. After years of seeing home prices drop like flies and rental markets tightening up better than pair of Spanx, it’s safe to say that homeownership is very affordable almost everywhere. In fact, it is now cheaper to buy than to rent in 98 of the 100 most populous metros – including (shocker!) pricey places to live like New York, Los Angeles and Boston. Says who you ask? Our Trulia’s Winter 2012 Rent vs Buy Index – that’s who!To give you a little bit of background, this Index is what we use to figure out whether buying a home or renting in a given metro is easier on the pocketbook. To do this, we look at asking prices for rentals and homes for-sale on Trulia.com while also factoring other costs like taxes, insurance and maintenance, etc. Click here to view the full-size interactive graphic. Just see for yourself. After ranking all the metros (marked as dots in the chart below) in order of where buying is most expensive relative to renting, notice that the two metros at the top of the list —Honolulu and San Francisco — are no where close to being orange, let alone being in the red (read: renting is cheaper relative to buying). At best, they are a nice mustard yellow, which means that the asking price between renting and buying isn’t all that different. Instead, what really matters if you’re only doing a basic cost comparison is (1) your tax bracket and whether you can benefit from the mortgage interest deduction and (2) how long you actually plan to live in the house. Buying Beats Renting 99 Miles From LA, But Not Always Generally speaking, homeownership in SoCal gets pricier as you move away from the coast towards the desert, but this “rule” is by no means set in stone. There are a couple of big exceptions: Pasadena and the San Gabriel Valley. These two real estate markets are really far from the beach, but are crazy expensive places to buy a home as compared to renting. Heh, go figure. But check out Ojai and Ventura County! Los Angeles (Area Code) Price:Rent Ratio Westside LA / Beaches /Coast (310 / 424) 15.8 Pasadena / San Gabriel Valley (626) 15.8 Orange County South (949) 14.4 Central Los Angeles (213 / 323) 13.4 Orange County North (714 / 657) 12.8 Long Beach (562) 11.9 San Fernando Valley (818 / 747) 11.7 San Bernardino (909) 10.2 Riverside (951) 9.8 Start Spreading The News, I’m Leaving NYC For The Suburbs Today Truth be told, it won’t surprise anyone to say that you need to be making some serious bank in order to be a Manhattan homeowner. Housing crisis or no housing crisis, it’s still going to be a really expensive place to live compared to pretty much anywhere else in the U.S. of A. However, if you can let go of Manhattan city living (like Miranda in “Sex and the City” did), then you might be pleasantly surprised to know that buying a home is definitely doable. You just got to look even further than Brooklyn and Staten Island (priced-out Manhattanites have bid up home values in many neighborhoods…boo! hiss!). How far? Think Queens, the Bronxand other nearby suburban counties. New York City Area (Borough or County) Price:Rent Ratio Manhattan 20.0 Brooklyn 15.7 Staten Island 15.3 Queens 13.6 Bergen, NJ (Hackensack) 12.5 Hudson, NJ (Jersey City) 12.1 Nassau, NY (Long Island) 11.8 Bronx 10.9 Westchester, NY 9.3 NOTE: The lists above rank the major metros where renting a home is most expensive relative to buying, and vice-versa. Price-to-rent ratios that are 15 and under indicate buying is less expensive than renting, while ratios that are 20 or higher indicate renting is less expensive than buying. Between 15 and 20, the rent-versus-buy calculation depends on tax deductions and other personal circumstances. Left My Heart In San Francisco…As I Move To The East Bay When it comes to buying a home in the SF Bay Area, you’re going to have to pay a pretty penny as compared to renting to do so in San Francisco, the Peninsula (San Mateo County) and in the South Bay (Santa Clara County). You’re more likely to get a better deal once you cross the Bay Bridge and head to the East Bay (Alameda County and Contra Costa County). That’s because there’s been more empty homes andforeclosures on that side of the bay. San Francisco Bay Area (County) Price:Rent Ratio San Francisco 17.2 Santa Clara (San Jose) 14.5 San Mateo 14.0 Alameda (Oakland) 12.1 Contra Costa 10.8 If You’re Living in Chicago, It’s Cheaper to Buy vs. Rent No matter how you slice and dice it, being a homeowner in Chicago is much more affordable than being a renter. Even in the heart of the windy city (the Loop and Near North Side), buying is relatively cheaper than buying than in many suburbs of New York, San Francisco and Los Angeles. Chicago (Area Code) Price:Rent Ratio Loop and Near North Side (312) 11.4 Chicago except downtown (773) 8.0 North/Northwest Suburbs (847 / 224) 7.7 Western Suburbs (630 / 331) 7.5 South Suburbs (708) 5.0