fort-greene-090214

It’s cheaper to buy than to rent in 94 of the top 100 largest metro areas in the U.S., according to a report from Zillow quoted in a story in Business Insider. Renters spend 29.5 percent of income on rent, on average, vs. only 15.3 percent of income home owners spend on mortgages. (The comparison doesn’t seem to take into consideration repairs, heat, insurance and other costs — or the homeowner’s tax deduction either.)

The reason buying is cheaper, according to the study: Rents never dropped, even during the downturn. And they continue to rise. However, if interest rates also go up, then so will the cost of buying, the study warned.

Most interesting, the number of all cash purchases decreased, which suggests investors are easing back on rental purchases. In the second quarter, 38 percent of all sales were all cash, vs. 42 percent in the first quarter (the highest in three years). Usually an all cash purchase means either investors or retirees cashing out, noted the story.

So far investors don’t seem to be leaving Brooklyn — quite the contrary, as gentrification here continues to expand — but if nationwide or globally the markets pulled back on funding for REITs that buy rental property, that could dampen investment purchases here.

First time homebuyers will find themselves locked into renting and unable to buy unless wages increase and home prices stay flat, according to Zillow.

With both rents and home prices increasing dramatically in Brooklyn as of late, has the buy vs. rent equation stayed the same? Is it cheaper to buy than rent?

It Might Be Cheaper to Buy a Home Than to Rent [Biz Insider]


What's Your Take? Leave a Comment

  1. What about for people buying multi-family homes who can rely on healthy rental income? I’m think that for many of these people it’s ultimately cheaper to buy than rent, even in NYC.

1 2