A survey by the Wall Street Journal finds that home ownership is now more affordable than at any time in the past 15 years. According to its third-quarter survey, low home prices and low interest rates are combining to make owning a home less expensive than renting one in 12 major metropolitan markets. It remains cheaper to rent in 15 markets surveyed by the Journal.
Five years after the market peaked, the housing market remains depressed. October new home sales, released this morning, totaled 307,000, slightly below estimates. Meanwhile, prices rose slightly.
But, as your real estate broker will happily mention – ‘Now is a great time to buy!’ Unlike 2007, when that obviously was not the case for most, now it might actually be true. Ironically, the reluctance for many to buy a home is what makes it a good (relatively) time to purchase.
As Aaron and Henry discuss in the accompanying clip, owning a home is now more affordable than any time in the last 15 years, based on a new Wall Street Journal survey. In fact — with the average price of a home $242,300 — it is now cheaper to own than rent in 12 metro areas including Atlanta, Chicago, Detroit, Las Vegas, Miami, Orlando and Phoenix.
As the WSJ article points out, the discrepancy between buying and renting can be extreme in some areas:
“In Atlanta, which had the most favorable values for owning versus renting, the monthly payment on the average home was $539 assuming a 20% down payment during the third quarter. By contrast, the average asking rent stood at $840.”
Sagging prices and sub-4% interest on a 30-year fixed mortgage are the biggest drivers behind the trend of record housing affordability. However, unlike the glory days when buying a home merely took a pulse, securing a loan today is much tougher. And, flipping property is a dead game.
Good Time to Buy? Housing Cheaper to Own vs. Rent in 12 U.S. Metro Areas: WSJ
By Peter Gorenstein | Daily Ticker – Mon, Nov 28, 2011 12:30 PM EST