07 Feb Here’s where owning a home is cheaper than renting one
By: Diana Olick, CNBC
Fierce competition for lower-end homes, thanks to a combination of low mortgage rates and record low supply, is driving prices higher.
That can make it difficult to figure out whether its cheaper, on a monthly basis, to own or rent.
The answer is: It depends where you are.
The nation’s top 50 metropolitan areas are almost evenly split on the rent versus own calculation. It is cheaper to own in 24 markets and cheaper to rent in 26, according to new research from CJ Patrick Company, based on data from First American Data Tree.
It looked at median rent prices, median home sale prices, and taxes and insurance. For the buy calculation, it only considered homes in the lowest quarter of the price scale, which would typically be purchased by first-time buyers. It assumed a 30 year fixed-rate mortgage at 5% interest with a 5% down payment.
Of the top 50 markets, 14 showed very little difference between the monthly costs of renting and owning a home. Cities in the Midwest and South favored buying.