Buying Real Estate – A Better Deal Than Renting in 74% of Major U.S. Cities

Buying real estate continues to be cheaper than renting in the vast majority of major U.S. cities, according to a quarterly rent vs. buy index from real estate search and marketing site Trulia.

The index compared the median list price and the median annualized rent on a two-bedroom apartment, condominium, or townhouse in the country’s 50 most populous cities. According to the index, the cost of buying was less than renting in 37 of the 50 cities (74 percent) as of July 1, 2011. About the same share, 78 percent, favored buying over renting in Trulia’s last index report, released in April.

Trulia defines total costs of home ownership to include “mortgage principal and interest, property taxes, hazard insurance, closing costs at time of purchase, and ongoing (homeowners association) dues and private mortgage insurance, where applicable. It also includes an offset for the tax advantages of home ownership, including mortgage interest, property tax, and closing cost deductions.”

“Many aspiring homeowners are on the fence about renting and buying in today’s market. Should they take advantage of falling home prices and low borrowing costs, or should they continue to rent until the economy stabilizes?” said Ken Shuman, spokesman for Trulia, in a statement.

A price-to-rent ratio of 1 to 15 means that it’s much cheaper to buy than to rent in a particular city. Las Vegas, Detroit, and Mesa, Arizona most favored buying among major cities.

Top 10 cities to buy vs. rent:

Source: Trulia

Rent vs. Buy Index – July 2011

This article was taken from Inman news and published by Trulia. As you can see, Honolulu is ranked #25 and with a 14 price-to-rent ratio. It is below the set point of 16 price-to-rent ratio, which is where you must decide if you’re buying for pleasure or out of need.

With our prices so low compared to our peak in 05 and 06, this proves there has never been a better time to buy than now. Interest rates are at historic lows also. This presents us with the “perfect storm” for buying property in Hawaii.

Contact me for any real estate needs on Maui.                                  

Rustin  
808-281-1625  
rustin@hawaiilife.com