This might just be the time to purchase a new home.
Recent data from real estate website Trulia.com found that buying is cheaper than renting in 74 percent of the nation’s major cities.
In locations such as Las Vegas, Philadelphia and Detroit — where foreclosures have been rampant, unemployment is high and prices have dropped considerably — purchasing a home can mean lower monthly mortgage payments than rents, according to the real estate site.
“With interest rates where they are and property values really on the very, very low side, it’s a good opportunity to buy,” says Joanne Davidow, a vice president at Prudential Fox & Roach in Philadelphia. “A lot of sellers have gotten very real as far as prices are concerned.”
The survey compared rents for two-bedroom units to the selling price of two-bedroom properties. In many communities, rents are high and vacancy rates are low because people are squeamish about making a large purchase during a down economy. Many homeowners are opting to bank their money and rent instead of purchasing a new place.
“Prospective homebuyers no longer see homes as a quick moneymaking investment,” says Pete Flint, CEO and co-founder of Trulia. “They are proceeding with more caution, asking themselves if they are planning to live in the home for several years, have enough money saved up to make a down payment and can pay a monthly mortgage.”
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NYC remains pricey
Owning a home may be cheaper in most U.S. cities, but Boston and New York are among the exceptions. They’re part of the approximately 12 percent of the nation’s cities where renting is still easier on the budget than buying.
Newlyweds Erin and Brian Fleming were hoping to move out of their Boston rental and purchase their first home, but realized quickly they couldn’t afford it.
“I think to own the place we rent would cost at least $600,000, which we could never afford. We pay around $1,600 in rent [monthly],” says Brian Fleming.
This two-bedroom in South Philadelphia is on the market for $159,900. The estimated mortgage payments, according to Trulia.com, would be $940 a month. The median rent for a two-bedroom in Philadelphia is $1,150-$1,650, according to Trulia.com.