Buying Still a Better Deal than Renting

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According to Trulia, it is 44% cheaper to buy versus rent, and homeownership is less expensive than renting in all of America’s 100 largest metropolitan areas. Why? Affordable mortgage rates have kept buying an attractive option for would-be renters in the market. Unfortunately the opportunity won’t be here forever, and Trulia’s chief economist Jeff Kolko said, “Although buying a home is still cheaper than renting, the gap is closing.” By the end of 2013, home prices should rise faster than rents, and mortgage rates are likely to rise also.

The Census Bureau recently reported that annual household formations are almost back to housing boom levels. Household formations include when a new renter or buyer comes into the marketplace for the first time.  During the housing boom, there were 1,250,000 annual formations, but from 2008-2011, there were only 650,000 annual formations, a 48% decrease. Freddie Mac is projecting 1,250,000 new household formations in 2013, and although these figures include both renting and buying, Generation Y believes strongly in home ownership.

Millennials, though previously typecast as a group who would never buy, are making strides toward homeownership as well. In fact, 93% of young adults age 18-34 who currently rent plan to buy a home, and 65% indicate that their intention to buy has significantly or somewhat increased in the past year. The two top reasons to buy are desire to own/build equity and tired of apartment living. These homebuyers will join the marketplace and become additional competition to homeowners already thinking about buying.

If you feel like you missed the chance to buy at the bottom of the market, the opportunity is not completely lost. For current renters who are thinking of signing a lease, contact an agent today to see how affordable buying a home can be.

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Categories: Home Buying, Real Estate News

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