Even with a sustained rise in home prices over the past year, buying a home is significantly cheaper than renting one in the Bay Area.
On average, buying is 13 percent cheaper than renting a
comparable home in the San Francisco metropolitan area, according to the latest
Rent Vs. Buy Report from real estate listings syndicator
Trulia. In the Oakland metro area, the savings total 24 percent. (The San
Francisco metro area includes Marin, San Francisco and San Mateo counties; the Oakland metro area includes Alameda and Contra Costa counties.)
Rising home prices and mortgage rates have narrowed the gap
between buying and renting over the past year, but sky-high rental prices still
give the edge to homebuyers. A year ago, buying was 19 percent cheaper in San
Francisco and 40 percent cheaper in Oakland.
Nationwide, buying a home is 38 percent cheaper than renting, according to the survey of 100 U.S. cities, conducted in December and January.
Nationwide, buying a home is 38 percent cheaper than renting, according to the survey of 100 U.S. cities, conducted in December and January.
Trulia based its calculations on obtaining a 30-year,
fixed-rate mortgage with a 4.5 percent interest rate; itemizing deductions at
the 25 percent federal tax bracket; and staying in the home at least seven
years.
Will renting become cheaper than buying soon? According to
Trulia’s methodology, buying will edge renting by only 2 percent in San
Francisco and 15 percent in Oakland when mortgage rates reach 5.5 percent.
Currently, 30-year, fixed-rate mortgages average 4.37 percent, according to Freddie Mac.
Of course, comparing mortgage rates and rents is just one part
of a potential homebuyer’s decision. Several months ago, a survey by the California Association of Realtors found that nearly
75 percent of renters rated homeownership “important.” Among renters who
said they hope to own a home, 44 percent said they were renting only out
of financial necessity.
Renters mentioned a lack of building equity, the inability to
make changes to their living environments, and unpredictable rate increases as
the top three things they dislike about renting.
Another report found that owning a home can make families healthier, happier, and more financially secure.
The survey of Canadian families living in houses
built by nonprofit Habitat for Humanity found that 89 percent said their lives
had improved since they moved into their homes, and 86 percent said their
happiness had increased since buying.
Saraya and Simon Motley
Pacific Union and Christie’s International Real Estate
Serving Alameda & Contra Costa Counties
510.459.4338/direct . 925.385.8503/direct
925.403.7802/eFax
saraya@eastbayhouse.com
www.eastbayhouse.com
CalBRE License #01265873
Pacific Union and Christie’s International Real Estate
Serving Alameda & Contra Costa Counties
510.459.4338/direct . 925.385.8503/direct
925.403.7802/eFax
saraya@eastbayhouse.com
www.eastbayhouse.com
CalBRE License #01265873
(Image: Flickr/InstitutoInovacao)
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