In the go-go days of the housing boom and subprime loans, it was assumed that it always made sense to own rather than rent, since house values would always go up. But like many assumptions, that one turned out to be wrong.
The housing crash and resulting wave of foreclosures created much more affordable homes, but real estate search site Trulia.com reports its analysis shows there are still some markets where you come out ahead renting rather than buying.
Number one on its list is Minneapolis, where home ownership costs have dropped significantly in comparison to rents. It's followed by Arlington, Tex.; Miami, Fla.; Fresno, Calif.; San Antonio, Tex.; Mesa, Ariz.; Jacksonville, Fla.; Phoenix, Ariz.; El Paso, Tex.; and Las Vegas, Nev.
"At the peak of the real estate bubble, cities like Miami, Phoenix and Las Vegas were not affordable for many. Now the opposite is true," said Pete Flint, co-founder and CEO of Trulia. "Home sellers in these hard hit areas are forced to lower their prices to compete with all the foreclosures on the market. As a result, these unattainable markets are so affordable it makes better financial sense to buy than rent."
But there are many markets where rents are actually cheaper that owning a home.
For example, rents are very high in New York City, but they are still cheaper compared with the cost of owning a home in the city. The fact that New York tops the list of where it's cheaper to rent doesn't come as a surprise, but number two on the list just might.
According to Trulia, Omaha, Neb., is the second most expensive city in which to own versus rent. It's followed by Seattle, Wash.; Portland, Ore.; San Francisco, Calif.; Oklahoma City, Okla.; Kansas City, Mo.; San Diego, Calif.; Cleveland, Ohio; and Dallas, Tex.
"It is not a surprise to see cities like New York and San Francisco on the 'Rent' cities but I was surprised to see areas like Omaha, Oklahoma City and Kansas City on our rental list, "said Flint "We're not suggesting that it's unwise to buy in these areas though - just that it's significantly more expensive than renting. In many of these cities, even though home buying is much more costly than renting, prices are still much lower than they have been in a long, long time."
Total costs of home ownership include mortgage principal and interest, property taxes, hazard insurance, closing costs at time of purchase and ongoing HOA dues and private mortgage insurance, where applicable.
Total costs of homeownership include an offset for the tax advantages of homeownership, including mortgage interest, property tax and closing cost deductions.
Total costs of renting include rent and renter's insurance.
Copyright 2010  consumeraffairs.com
