Are you planning to buy a home this year or have you yet to decide? Ask us, and we will suggest to you that right now is a good time to become a homeowner because it is still more affordable than renting. Industry experts and the stats both agree with this.
A recent report published by a reputed real estate company website claims that purchasing a home is still 38% cheaper than renting a home in most parts of the country. Yes, the situation is good but the gap between the two figures is slowly narrowing. Last year, this value was around 44% higher than what it is right now. If the decline continues, eventually renting and buying a home will incur nearly the same costs.
The chief economist of the real estate website stated that mortgage rates are still low when you compare them to the values of the past few years. As for home prices, they increased last year and this year, the same is expected. Who knows next year if both mortgage rates and home prices may not be that favorable?
The above stats have been averaged for the entire country. Narrowing them down region wise, the lowest value observed is 5% and the highest value is 66%. This means that there are states where buying a home is just 5% cheaper and there are some in which becoming a homeowner is as cheap as 60%.
So how have these figures been achieved? The report states that a mortgage rate of 4.5% was assumed for a 30 year fixed mortgage. The down payment was set at 20% and some of the tax deductions still applied.
The report also states that there are some regions where renting is cheaper, but overall this cannot be said. In one area, renting is 17% cheaper and in another is 25% cheaper. So are the rents in these areas too low? Actually, no it is the inventory that is low. Moreover, home prices are also higher than averages in these areas.
We talked to an industry expert and he stated that homeownership was more affordable now, but this trend will probably change. Both prices and rates are rising, and the gap will decline until it does not exist.