Owning cheaper than renting in most U.S. cities

The quarterly Rent vs. Buy Index by Trulia compares renting a two-bedroom apartment, condominium or townhouse in America’s top 50 largest cities.

While 74% of major U.S. cities show conditions are cheaper to buy than to rent, others such as New York City, San Francisco and Seattle continue to favour renters.

About the same share, 78%, favoured buying over renting, according to a survey by Trulia. But despite the increasingly favourable situation to own a home, rising unemployment and tougher lending conditions have kept many Americans in rental properties.

“While recent stock market volatility on top of the slow economic recovery makes homebuyers nervous, it has not destroyed the American dream of homeownership,” said Ken Shuman, head of communications at Trulia. “However, prospective homebuyers, who are ready and qualified to buy, face an uphill battle despite falling home prices and record low mortgage rates.”

A price-to-rent ratio of 1 to 15 means that it’s much cheaper to rent than to buy.

Las Vegas topped the list of cities where buying beats renting, with a ratio of 6. It was followed by Detroit, Mich,; Mesa, Ariz.; and Fresno, Calif., each at 7.

“Price alone should never be the sole factor in deciding to purchase a home,” said Shuman.

“Instead, buyers should first ask themselves if they plan to live in the home for at least seven-to-10 years, could make monthly payments on the house, and have enough cash in the bank for a down payment and an additional six to eight months’ worth of mortgage payments. If you can answer ‘yes’ to each of these questions, then the cost of buying a home definitely outweighs renting in most cities.”

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