Trulia's Latest Study Reveals Buying a Home Trumps Renting in 98 out of the 100 Largest Metros
Since the housing bubble burst, it seems like everyone and their mother can’t stop talking about what a great time it is right now to buy a home, but how good is it really? After years of seeing home prices drop like flies and rental markets tightening up better than pair of Spanx, it’s safe to say that homeownership is very affordable almost everywhere. In fact, it is now cheaper to buy than to rent in 98 of the 100 most populous metros – including (shocker!) pricey places to live like New York, Los Angeles and Boston.
Says who you ask? Our Trulia’s Winter 2012 Rent vs Buy Index – that’s who! To give you a little bit of background, this Index is what we use to figure out whether buying a home or renting in a given metro is easier on the pocketbook. To do this, we look at asking prices for rentals and homes for-sale on Trulia.com while also factoring other costs like taxes, insurance and maintenance, etc.
Just see for yourself. After ranking all the metros (marked as dots in the chart below) in order of where buying is most expensive relative to renting, notice that the two metros at the top of the list —Honolulu and San Francisco — are no where close to being orange, let alone being in the red (read: renting is cheaper relative to buying). At best, they are a nice mustard yellow, which means that the asking price between renting and buying isn’t all that different. Instead, what really matters if you’re only doing a basic cost comparison is (1) your tax bracket and whether you can benefit from the mortgage interest deduction and (2) how long you actually plan to live in the house.
Start Spreading The News, I’m Leaving NYC For The Suburbs Today
Truth be told, it won’t surprise anyone to say that you need to be making some serious bank in order to be a Manhattan homeowner. Housing crisis or no housing crisis, it’s still going to be a really expensive place to live compared to pretty much anywhere else in the U.S. of A. However, if you can let go of Manhattan city living (like Miranda in “Sex and the City” did), then you might be pleasantly surprised to know that buying a home is definitely doable. You just got to look even further than Brooklyn and Staten Island (priced-out Manhattanites have bid up home values in many neighborhoods…boo! hiss!). How far? Think Queens, the Bronx and other nearby suburban counties.
|New York City Area|
|Borough or County||Price:Rent Ratio|
|Bergen, NJ (Hackensack)||12.5|
|Hudson, NJ (Jersey City)||12.1|
|Nassau, NY (Long Island)||11.8|
NOTE: The lists above rank the major metros where renting a home is most expensive relative to buying, and vice-versa. Price-to-rent ratios that are 15 and under indicate buying is less expensive than renting, while ratios that are 20 or higher indicate renting is less expensive than buying. Between 15 and 20, the rent-versus-buy calculation depends on tax deductions and other personal circumstances.
Left My Heart In San Francisco…As I Move To The East Bay
When it comes to buying a home in the SF Bay Area, you’re going to have to pay a pretty penny as compared to renting to do so in San Francisco, the Peninsula (San Mateo County) and in the South Bay (Santa Clara County). You’re more likely to get a better deal once you cross the Bay Bridge and head to the East Bay (Alameda County and Contra Costa County). That’s because there’s been more empty homes and foreclosures on that side of the bay.
|San Francisco Bay Area|
|Santa Clara (San Jose)||14.5|
Buying Beats Renting 99 Miles From LA, But Not Always
Generally speaking, homeownership in SoCal gets pricier as you move away from the coast towards the desert, but this “rule” is by no means set in stone. There are a couple of big exceptions: Pasadena and the San Gabriel Valley. These two real estate markets are really far from the beach, but are crazy expensive places to buy a home as compared to renting. Heh, go figure.
|Area Code||Price:Rent Ratio|
|Westside LA / Beaches /Coast (310 / 424)||15.8|
|Pasadena / San Gabriel Valley (626)||15.8|
|Orange County South (949)||14.4|
|Central Los Angeles (213 / 323)||13.4|
|Orange County North (714 / 657)||12.8|
|Long Beach (562)||11.9|
|San Fernando Valley (818 / 747)||11.7|
|San Bernardino (909)||10.2|
If You’re Living in Chicago, It’s Cheaper to Buy vs. Rent
No matter how you slice and dice it, being a homeowner in Chicago is much more affordable than being a renter. Even in the heart of the windy city (the Loop and Near North Side), buying is relatively cheaper than buying than in many suburbs of New York, San Francisco and Los Angeles.
|Area Code||Price:Rent Ratio|
|Loop and Near North Side (312)||11.4|
|Chicago except downtown (773)||8.0|
|North/Northwest Suburbs (847 / 224)||7.7|
|Western Suburbs (630 / 331)||7.5|
|South Suburbs (708)||5.0|
To check out the all the findings from the report, check out the Slideshare deck below.0 comments
Ahead of Valentine's Day, Trulia surveyed Americans across the country to see how much real estate and dating choices intertwine.
When it comes to dating, we all have our own kooky preferences for finding that special someone. Whether we’re looking strictly for dog lovers, vegetarians, outdoorsy types or homebodies, everyone has a check-list of “must haves” or “would likes” to screen out the best possible prospects.
With Valentine’s Day right around the corner, we asked ourselves whether a person’s living situation affects their chances of finding love? Are women more attracted to men who own a home? Do men prefer women who rent in the suburbs vs. the city? We fielded our Love & Housing survey asking more than 2,000 US adults how much they care about a potential partner’s housing preference.
We found some surprising and some not-so-surprising stats on how today’s singles view dating and real estate.
Single and living with your parents? It may be time to move out.
It is now officially official that if you call your parents, “roomies,” you probably have a non-existent dating life. According to our survey, only 5% of unmarried U.S. adults would prefer date someone in that living situation.
But parents aside, most unmarried adults (62%) would rather date someone who lives alone versus someone who lives with other people — which makes sense. Living alone means no distractions and more privacy. However, when it comes to location and the type of home, there was definitely a noticeable difference between men and women. More women preferred to date someone who lived in a house in the suburbs and more men preferred dating someone in an apartment in the city. What can we say, guys like the fast-paced city life and girls long for the white picket fence!
|Would you, personally, prefer dating someone who lives…?|
|Total, Unmarried U.S. Adults|
|With other people||14%|
|Other or None||24%|
|Would you, personally, prefer dating someone who lives…?|
|Total||Unmarried Men||Unmarried Women|
|Alone in a house in the suburbs||33%||29%||37%|
|Alone in an apartment in the city||29%||32%||25%|
|With roommates in either the suburbs or the city||9%||14%||9%|
|With their parents||5%||6%||4%|
More men open to shacking up to save money
When you take that big step to live with your boyfriend or girlfriend, you are ultimately giving up your single life and layin down some commitment. But these days, this move is sometimes less about the solidifying the relationship and more about being economical. In our survey, a whopping 74% of unattached renters (meaning those who don’t own a home and haven’t tied the knot/haven’t made the decision to live together) said they would be at least somewhat willing to live with their significant other to save money. What we found was rather interesting. Men are more likely to be very willing or willing than women (51% vs. 34%) to giving up the bachelor pad to save some money!
|Would you be willing to live with a boyfriend, girlfriend or significant other to save money due to the economy?|
|Total||Unmarried Men||Unmarried Women|
|Not at all willing||26%||21%||30%|
Homeownership is NOT a deal breaker.
A majority (63%) of unmarried U.S. adults said it didn’t matter whether their significant other owned their own home or rented. That said, there are definitely more than a few picky daters out there who do care. Women in particular are more likely than men to prefer dating a homeowner versus a renter (36% vs. 19%). What can we say, some women really know what they want.
|Would prefer dating someone who rents or owns their own home?|
|Total||Unmarried Men||Unmarried Women|
|Owns their own home||28%||19%||36%|
|Rents their home||2%||2%||2%|
|It Doesn’t matter to me||63%||72%||54%|
Younger daters say homeownership signals commitment
Among unmarried U.S. adults, 43% said homeownership is NOT an indication that someone may be serious about being in a long-term committed relationship, such as marriage. And when we looked at what men and women said separately, there was only a sliver of a difference — 36% of women and 33% of men said owning a home was a signal that someone is ready to settle down.
However, when we took a at the differences in opinions across different generations, 44% of millenials (18-34 year olds) felt that homeownership does equal commitment while only 26% of Baby Boomers (55+ year olds) felt the same.
|Do you think homeownership indicates that a person may be serious about being in a long-term committed relationship, such as marriage?|
|Total||18-34 YO||35-44 YO||45-54 YO||55+ YO|
What spells love at first sight for first-time homebuyers
We asked all U.S. adults surveyed to select every amentitiy that would make them “fall in love” with a home. For men and women in the market for their first home, both sexes are actually seeing eye to eye on what’s most important — which according to our survey is the master bathroom, followed by a … walk-in closet!? Guess there is a lot more synergy between the sexes than we thought and that men care as much about their shoes and clothes as women do!
Maybe the battle of the sexes on this issue isn’t much of a battle after all.
Love and housing – it’s a tricky little thing
As we wrap up 2011, Trulia’s Chief Economist looks ahead at what’s in store for the battered housing market and which cities have a big reason to celebrate the New Year.
My crystal ball is never as crystal-clear as I’d like, but I do think that we can expect a gradual economic recovery to move the housing market a few steps back toward normal in 2012. Even so, we still have a long ways to go. As we exit 2011, prices still not have rebounded after their huge declines, inventories are still well above normal, and the foreclosure rate is still far higher than before the bubble. Even the best possible 2012 won’t get us halfway back toward normal.
Before getting into the predictions, let me be upfront about what I’m assuming. After 14 months of job gains, I expect the economy to continue its slow but determined recovery. I don’t do my own macroeconomic forecasts, but every single one of the fifty-ish economic forecasters surveyed by the Wall Street Journal expects the economy to grow throughout 2012, and that makes sense to me. Of course, any unexpected severe political or financial crisis could tip us back into recession, and then all bets are off. Here’s to hoping that doesn’t happen.
My five predictions for housing in 2012:
1) Delinquencies will go down, but foreclosures will go up. Fewer borrowers will fall behind on their payments next year, thanks to the strengthening economy and refinancings. The share of delinquent borrowers is already down more than a quarter from the peak a couple of years ago. But many borrowers who fell behind on their payments during the housing crisis are still in limbo: last year’s robo-signing controversy threw a wrench in the gears of the foreclosure process. That means that some delinquent loans haven’t yet entered the foreclosure process, and even fewer moved all the way through foreclosure — especially in Florida and other states where foreclosures require a longer legal process. Once a settlement is reached with banks over robo-signing in those states, we’ll see a new wave of foreclosures and foreclosure sales that’s long overdue. It’s a necessary step in getting the housing market back to normal even though it will be painful for people who lose their homes — and will rattle American’s confidence in the housing recovery.
2) Rents will rise – which is a bad thing. With fewer people buying homes and more people losing their homes to foreclosures, the rental market is only going to get tighter especially in older, dense cities like New York, Washington DC and San Francisco. High rents will hold back economic growth if businesses can’t pay workers enough to have a roof over their heads. Squeezed city-dwellers won’t get relief until late 2012: that’s when a wave of new multi-unit construction projects that started late this year will be completed and available for rent. To tackle growth-killing high living costs in the priciest cities head on, local governments need to get rid of height restrictions and arduous permitting processes, which hold back urban construction and push development to the suburbs.
3) Mortgage rates will inch up – which will probably be a good thing. A stronger economy will push Treasury bonds and mortgage rates up because inflation becomes more likely and investors demand higher rates to hold bonds. The Fed’s “Operation Twist” will prevent rates from rising too much, but other forces could push rates up higher or, alternatively, send them falling. If investors think the U.S. government will have trouble paying its debt – which they might if the government can’t agree to raise the debt ceiling or narrow the deficit — they’ll demand higher rates because of that risk; but global economic uncertainty – even here at home — could lower American interest rates if investors think American bonds are safe relative to other investments. Got whiplash yet? You’re forgiven. Lots of factors can push rates up or down. For the housing market, which direction rates go is less important than why. Gradual economic recovery is good news for the housing market even if it means higher mortgage rates – that’s what I think will win out next year. We’ll have higher rates for a reason we can cheer.
4) Government will sit on its hands. In election years, politicians don’t take risks: they’re more talk and less action, so don’t expect any bold housing policy reforms next year. What’s more, with the housing market now recovering, we’re not in enough of a crisis to force political opponents together. The time has passed for bold government action on housing. We’ll look back wistfully on the modest policy wins of 2011: borrowers who’ve kept up their payments can now refinance under the expanded HARP program, and the government is planning ways to sell or rent out vacant homes it owns (which will probably be announced in early 2012). But these targeted policies won’t move the needle on national foreclosures, sales or prices.
5) Smart cities are hot. In 2012, the local housing markets that will enjoy rising prices, new construction or both, are those that start the year with stronger job growth and fewer empty homes holding back the market. Based on these factors, along with other leading indicators, here are my top five cities to watch:
—Austin, TX, and Houston, TX. The bloom’s not off the yellow rose of Texas. Steady job growth and a construction revival make Austin and Houston two of my five cities to watch. Texas isn’t hung over from the housing boom like the other big states of the South and West, so there’s little to hold back growth. Honorable mention to Fort Worth and San Antonio.
—San Jose, CA. Wasn’t California at the center of the foreclosure crisis? Didn’t prices there fall more than everywhere else in the country? Yup. But there’s no such thing as the California housing market: California is almost as diverse as the U.S. Even though prices plummeted and foreclosures skyrocketed in inland California, the coast is another world. San Jose’s perennially tight housing market makes it faster to bounce back. The San Jose market –which includes most of Silicon Valley – has rapid job growth and the lowest vacancy rate in the country.
—Suburbs of Boston, MA. This Cambridge-Newton-Framingham market just west of Boston has a strong jobs engine and, like most of New England, missed the worst of the housing bubble. Honorable mention goes to Worcester, one step further west, and Boston’s northern suburbs around Peabody. These areas all benefit from offering more bang for the buck than crowded, expensive Boston: this is because most people looking to move are searching in more suburban or smaller areas than where they live now.
—Rochester, NY. That’s my hometown, and knowing what’s happened to Kodak and other pillars of the local economy, I was surprised when Rochester scored on the top 5 list. (I applied the same formula to all cities and did not have my thumb on the scale.) Prices – which fell little during the boom – are stable, and the economy has weathered blow after blow and is expanding.
What do these markets have in common? Three – Austin, San Jose, and the area west of Boston – are technology centers. In those three metros, as well as in Rochester, a center of high-skill manufacturing industries, education levels are well above the national average. As the recovery proceeds, smart cities are leading the way. During the housing boom, the go-go cities tended to be lower-skill, lower-education metros. But in 2012, smart is hot: it’ll be the revenge of the nerds.
Links to Trulia Insights blog posts:
Buying a Home Beats Renting in 74% of America's 50 Biggest Cities – Is This True in Your Hometown?
So for the third time this year, we pitted the cost of renting against the cost of buying a two-bedroom apartment, condo or townhouse to see who would win in a fair fight. Without rubbing it in too much, let’s just say homeownership was awarded the KO victory (for those of you at home who don’t watch boxing or mixed martial arts, ‘KO’ stands for ‘knockout’ which means they won with a single punch) in 3 out of 4 major U.S. cities.
Oh Snap! Miami’s Heating Up
Just to be perfectly clear, we’re not talking about the Miami Heat and King James (that would be LeBron James for our readers who aren’t basketball fans). What we are talking about is the beginnings of an interesting shift that’s happening to the housing market in the city of Miami.
Homeownership is cheaper than renting in four out of five major US cities - what's the better option where you live?
Falling prices and record-low mortgage rates sure makes buying a home pretty tempting, but is it actually cheaper than renting? To find out, we did an apples-to-apples comparison between the cost of renting versus buying a two-bedroom apartment, condo or townhouse. The verdict? Hands down, buying is a “winning” choice in nearly 80% of all major U.S. cities.
Foreclosure Hotspots = Real Estate Clearance Sale
Extreme couponing won’t work on real estate, but why would you even bother when buying a home today is dirt cheap, especially in cities where bank-owned properties and short-sales have flooded the housing market.