This week, real estate website Trulia released its Summer 2012 Rent vs. Buy Report, which analyzes the average cost of renting versus buying for all homes on the market in America’s 100 largest metropolitan areas. Trulia’s research factors in all cost components including transaction costs, taxes and opportunity costs, and assumes a 3.5 percent mortgage, itemized deductions at the 25 percent federal tax bracket and a seven-year time horizon.
The report found that homeownership is cheaper than renting in all of the 100 largest U.S. metros by a wide margin, but does note that relative affordability varies by location. For example, the largest savings can be found in Detroit, where it is 70 percent cheaper to buy a home than renting one. On the other end of the spectrum is Honolulu where it is only 24 percent cheaper to buy a home than rent.For a while now, rising rents have made buying a home more attractive. With interest rates at historic lows and home prices more affordable than in years past, homeownership makes sense from a financial standpoint and also offers advantages that simply can’t be attained through renting such as a fixed monthly housing cost and the ability to earn equity in their home.
To view a full list of the rent vs. buy cost considerations for the 100 largest metros, click here: Trulia Rent vs Buy Summer 2012 Full List