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Mar 24

Ain’t No Lie, It’s Cheaper to Buy

Compliments of Trulia.com: 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?

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? Says Trulia’s Winter 2012 Rent vs Buy Index – used by Trulia to determine whether buying or renting a home in a given metro is easier on the pocketbook. To do this, they looked at asking prices for rentals and homes for-sale on Trulia.com while also factoring other costs like taxes, insurance and maintenance, etc.

Click to view the full-size interactive graphic.

Just see for yourself. After ranking all the metros (marked as dots in the chart above) 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.

 

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