The monthly cost of owning a median-priced home (including taxes and insurance) is lower than the average cost to rent in 12 metro areas, according to a Wall Street Journal survey. In 15 of the 27 cities surveyed, it is still less expensive to rent, but the scale has been tipping in favor of homeownership. In fact, according to the survey, homeownership is more affordable than it's been in 15 years.
Some of the cities where homeownership costs less than renting include Atlanta, Chicago, Detroit, Las Vegas, Miami, Phoenix and St. Louis. Not coincidentally, some of those areas are also the ones where home prices dropped the furthest during the housing crash.
Rental rates rose nationwide about 4 percent, while home prices continue to fall and mortgage rates remain low. But lately buyers have been reluctant because their credit isn't good enough to qualify for a low-interest mortgage or they can't sell their current home.
But there are signs that the tide is turning back to homeownership and buyers are taking advantage of affordability in the housing market. Pending home sales rose 10.4 percent in October from a month earlier, according to the National Association of Realtors (NAR). The Midwest saw the biggest gains, with a 24-percent increase, while in the West, sales remained basically flat. The Northeast and South also saw gains.
Pending home sales, however, don't always turn into signed contracts. Realtors are saying about 18 percent of buyers back out, compared with 4 percent to 6 percent normally. Reasons include not qualifying for credit, cold feet and -- since many of the pending sales are distressed properties -- buyers sometimes becoming weary with the long process required for a short sale.
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