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Buying is cheaper than renting

By Polyana da Costa · Bankrate.com
Thursday, April 28, 2011
Posted: 10 am ET

After seeing how the housing market has collapsed over recent years, you may wonder why anyone in their right mind would want to enter the tricky game of homeownership.

Here is a compelling reason: It's cheaper than renting -- at least that is the case in nearly four of five major U.S. cities, according to a rent vs. buy index released by Trulia today.

The index showed it is cheaper to own a home than to rent in 39 of the 50 cities included in the research. The only cities where the cost of homeownership is "much greater" than renting are New York, Fort Worth and Kansas City.

Las Vegas, one of the areas hit hardest by the foreclosure crisis, ranked at the top of the affordability index, followed by Phoenix and Arlington, Texas.

Granted, the index doesn't take into consideration the costs of maintaining a home. In most rentals, the landlord picks up the tab whenever there is a maintenance issue. Many first-time homebuyers don't realize they'll be faced with those extra costs until after they move into their new home.

But in some areas prices have tumbled so low that even if you factor in the cost of replacing a broken air conditioning unit every other year, it would still be cheaper to own.

That trend is expected to continue through the rest of the year as the rental market gains strength. Rents have started climbing and apartment vacancies have been dropping, according to various recent market studies.

Those who are hesitating to buy a home or can't qualify for a mortgage loan in the still tight lending market will likely be stuck with higher rents.

Some may choose the higher rent prices over having to deal with the headaches of owning a home.

What will you choose? I guess a better question is: Will you have a choice?

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4 Comments
Janelle
May 25, 2011 at 8:13 pm

I really do agree I do not think it is a matter of wanting to buy a home it is a matter of whether or not you can qualify. Even though the prices of homes are going down the criteria to get one is still way up there. Sometimes you just have to rent until you can get your credit in order.

Sam
May 16, 2011 at 4:00 pm

Rent! You don't want the responsibilities of shoveling snow, condo fees if that applies, real estate taxes that go up every year because your city doesn't know how to act properly with your real estate tax money, municipal issues, unruly neighbors, garbage in your yard, broken this and broken that. Clear out the pipes, cleaning, leaks... Do I need to go on? How about freedom to come and go when you can't find a girl friend or boyfriend... try another state other then Massachusetts .. ;)

John Luma
May 10, 2011 at 10:15 pm

People generally rent because they don't have the 10-20% down payment still demanded, or they don't have a great credit rating -- also something most lenders insist on now. So this article is totally disconnected with reality: Everyone would rather own than rent, but a huge percentage do not qualify.

Beatle.ex
May 10, 2011 at 10:02 am

All well and good... so are all of the renters who see your opinion are going to "ball and chain themselves" to a house that for now is loosing it's value.

What will they do when they want to move? Rent it out? Duh.
Sell it... DOH. sure... take a loss... and shake their heads for even listening to you.

This conversation goes beyond the scope of this chatter.
Don't buy unless you want to stay for a long time.