Rent vs buy. It’s a common battleground in real estate. Agents and realtors continually try to discuss which one is better or more beneficial. In truth, deciding whether you should rent or buy a house is a lifestyle choice. Deciding factors usually wrap around where you are in your life. Some people are still saving up money to buy a house while others are moving up in their careers and starting families. But there is one factor that always runs through every person’s mind: Price.
Reasons Why Buying is Cheaper than Renting
According to the Mortgage Bankers Association (MBA), buying a home is still 35% cheaper than renting in all of the largest metro areas around the nation (including Austin). The price gap between renting and owning has been narrowing as real estate continues to recover. Just last year, owning was 45% cheaper than renting. So, this begs 2 questions:
- Will renting be more affordable than owning anytime soon?
- Why is owning a home more affordable than renting if home values are rising?
This summer alone, real estate in Austin saw a spike in home prices and mortgage rates. Naturally, this should mean that buying a home would be more costly than renting. However, since home prices and mortgage rates are climbing from an all-time low (from the real estate collapse in 2007-08), buying is still more affordable.
Secondly, the gap between renting and owning is narrowing. Some metro areas like San Francisco have a very slim gap that barely tips in favor of buying. However, we shouldn’t expect too many jumps for the Austin area. Mortgage rates are expected to equalize for the next few months while Austin still benefits from a heavy relocation market. It may be another year or two before renting becomes more affordable than owning a home.
Calculations Behind Renting vs Buying
From Trulia’s rent vs buy report, they examined more than the rent and for-sale price on properties. Additional costs like maintenance, insurance, and taxes were pulled in as well. Other factors like appreciation, closing costs, down payments, mortgage rates, and security deposits were all included in the data calculations. To see if renting or buying is more affordable for you, use Trulia’s interactive Rent vs Buy map.
For More Information
If you’d like more information about buying a home in Austin, contact us or search our available listings and see how much cheaper they are than renting.