It’s no secret that home prices are rising, especially in the Bay Area. So is it really better to buy than rent? Rising housing costs may lead renters to believe that they are better off waiting on purchasing a home, but this isn’t the case in most markets–including much of the Bay Area.
According to Trulia, owning a home is 38% cheaper than renting, nationally. This statistic implies that the buyer has a traditional mortgage (30 year with 20% down). Trulia’s research also states that home ownership is cheaper than renting in the top 100 major metro areas in the U.S.
However, if you don’t plan to live in your current or prospective location for more than three years, it’s better to rent until you are ready to settle down. As Forbes states, homes generally appreciate at 2% per year and the typical homeowner stays put for an average of seven years.
So what makes it cheaper to buy than rent? Mortgage rates. When mortgage rates go up, and if they rise significantly, the scales begin to tip in favor of renting. In most places, mortgage rates would have to rise above 6 or 7% for renting to become cheaper.
Are you ready to begin your home search? Call Village Associates Real Estate today!