NEW YORK (MainStreet) – As if there were any doubt that we’re in a buyer’s market, a new report finds that it’s cheaper to buy a house than to rent one in three quarters of major U.S. cities.
That news comes from real estate site Trulia.com, whose Rent vs. Buy Index looks at the relative cost of the median list price and median rent for two-bedroom apartments, condos and townhouses in the nation’s 50 largest cities. It then uses its own methodology to determine whether it’s cheaper to rent or buy an equivalent home in different localities.
In the second quarter of 2011, the index determined that it makes more sense to buy than to rent in 74% of the largest U.S. cities. Unsurprisingly, the list of cities where buying is the cheaper option is topped by two cities where the housing market has completely collapsed: Las Vegas, with a foreclosure rate six times the national average, and Detroit, whose price-to-rent ratio fell by 39% from January to July according to Trulia.
In spite of the dismal housing market, some cities are still friendlier to renters than buyers. New York City and Fort Worth, Texas lead the pack, and on the west coast Seattle and San Francisco are still places where it’s better to rent. But those cities are the exception rather than the rule.
The rankings are just one of about a million indicators suggesting that you should be buying a home if you have the credit score necessary to get a mortgage. Interest rates for home loans are down across the board, and adjustable-rate mortgages in particular are looking very attractive to homeowners who might not be in the house for the long haul. And while there are some justified fears that low consumer confidence could drive prices even lower, there’s also evidence that the market is starting to stabilize.