With all the talk nowadays concerning the housing market, it can be hard to understand what your best options are when it’s time to find a new place to call home. When I was younger, the first and only option I thought I’d have once I left the nest was to rent. With the seemingly high cost of buying and maintaining my own home and the many low-cost rental options available at the time, it seemed like a no-brainer.
My, how times have changed.
A chain of events over the last several years has flip-flopped homeownership and rental expectations. With recent uncertainties in the housing market, many cities have seen a rapid increase in those looking to rent. More renters translate to less available rental properties and higher rents. These rising rents combined with extremely low home prices mean that it’s now cheaper to buy a home than it is to rent in 98 out of 100 of America’s largest metropolitan cities, according to real estate website Trulia.
As my dear friend Bill Murray once said, “Dogs and cats living together – mass hysteria!”
Delving a little deeper, Business Insider recently published an examination of data collected by real estate search engine HotPads. The analysis lists the top 12 U.S. Cities Where It’s Cheaper to Buy a Home Than to Rent One, with Detroit taking the top spot.
Metropolitan Detroit has an astounding 3.7 price-to-rent ratio, which compares the total cost of homeownership with the total cost of renting. To put that into more clear terms, when the price-to-rent ratio is less than 15, it‘s a much better deal to buy than it is to rent. Yes, you are correct – that’s kind of a HUGE DEAL.
Even if you aren’t looking for a new primary residence, but have been considering the purchase of a rental property, this should be welcome news. Prices are super-low for buyers, but rent prices are still high for rental property owners to make a profit.
I know what you might be thinking. Maybe home prices haven’t quite hit rock bottom yet and you want to wait a little while to see how things shake out. Well, don’t let the Rolling Stones fool you; time is not on your side. The LA Times recently reported that annual home prices have risen for the first time since 2007, according to data from real estate site Zillow. What’s more, prices have been moving up steadily over the last four months. If you want to take advantage of the mega home-buying deals out there, you’d better get a move on.
What does this news mean to you? Are you currently on the fence as to whether to buy or rent? Does this change anything for you? Let us know in the comments below!
Here’s the complete list of Business Insider’s top 12 U.S. cities where it’s cheaper to buy than to rent.
- Detroit, Mich.
- Orlando, Fla.
- St. Petersburg, Fla.
- Pittsburgh, Pa.
- Jacksonville, Fla.
- Tampa, Fla.
- San Antonio, Texas
- Riverside, Calif.
- Las Vegas, Nev.
- Houston, Texas
- Sacramento, Calif.
- Phoenix, Ariz.