A new report shows the cities where buying a home makes the most sense, and the cities where it doesn’t.
Joe Raedle / Getty Images
Is it still worth it to buy a house, or are you better off renting? After a housing bubble, a housing crash, a financial crisis, and a Great Recession, plenty of people have turned away from the American dream, helped along by impossibly high prices in some big cities, stagnant wages in others, and mortgages that remain tough to get.
But across most of the country, buying is still a much better deal than renting, according to a new study by real estate site Trulia. In all 100 of the country's biggest metro areas, owning comes out cheaper than renting — 35% cheaper, on average.
To calculate the advantage of buying over renting (and vice versa), Ralph McLaughlin, Trulia's housing economist, assumed buyers would make a 20% down payment on their home and take out a 30-year fixed-rate mortgage at 3.87%. Alongside mortgage payments, he factored in things like maintenance, insurance, and taxes; one-off costs were also considered — closing costs for owners, security deposits for renters, and so on (you can see the detailed methodology here).
Once all that, and more, is strung together, the report tried to answer a simple question: Should you use all that money to buy a house, or just invest it somewhere else and rent a place instead?
In some cities, buying looks like a no-brainer:
Trulia
In others, the gap is smaller (but still in favor of buying):
Trulia
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