As the cost of renting continues to rise and home values keep dropping, buying a home is beginning to make more financial sense than renting. According to real estate data provided by Trulia’s rent vs. buy index, buying is “Much More Affordable than Renting” in Atlanta, GA. The index is based on asking prices for rental units and homes for sale on the company’s website between Dec. 1, 2011, and Feb. 29.
“As rents rise and prices stagnate, homeownership is becoming even more affordable, but rising rents create a dilemma for people who can’t afford to buy yet,” says Jed Kolko, Trulia’s chief economist. “Rising rents make it harder for people to save for a down payment, which is the biggest barrier to buying a home that aspiring homeowners face.”
Although buying makes more economic sense, many people are struggling to pay their rent, let alone save for a down payment. In this case, many are still choosing, or being forced, to rent. But as the demand for rental properties increases, so do the prices.
The only metro areas that renting is often a better deal than buying are the Honolulu and San Francisco areas. However, Trulia’s real estate data points out that buying a home in these markets might make sense for people who plan to stay in their next home for at least five years and can benefit from the mortgage-interest tax deduction.
“Metros where homeownership is expensive tend to have stronger long-term economic growth and little room to build new homes, like Boston and the San Francisco Bay Area, where people expect home prices to increase over time,” Kolko says.
According to real estate data provided by CNN Money, there are some areas where buying is drastically cheaper than renting a home, such as Detroit, Michigan, Toledo and Cleveland, Ohio. But the areas with extreme price differences tend to be older and run-down. Although, there could be a reason why buying can be dramatically less expensive in these areas:
“Buying is much cheaper than renting in slow-growing places with high vacancy rates and land to spare like Detroit and Cleveland, where prices are unlikely to improve much in the future,” said Trulia’s chief economist Jed Kolko.
If you are renting in Atlanta and want to explore your purchasing power, contact us today!
