Why It’s More Expensive to Own Than to Rent
Digested from “Proof home ownership costs more than renting”
Business Insider (9/1/15) Franks, Erik
Renters are expected to surpass homebuyers by 2030, in part because of the flexibility but also because of the cost. In most major metro areas, it’s considerably more expensive to own than to rent.
The largest discrepancy is in San Francisco, where there is a $2,556 monthly premium on owning. Other notably expensive areas include San Jose ($1,766), Orange County, Calif. ($1,472), San Diego ($792), Austin ($565) and Seattle ($537). The only cities in which it may actually be cheaper to own are Minneapolis, Tampa and Chicago. Areas with a differential of $100 or less include Atlanta ($93), Riverside-San Bernardino, California ($56) and Orlando ($20).
Reports to the contrary may fail to take into account updated lending practices — namely, most first-time buyers put down only 10 percent rather than 20 percent, and buyers generally aren’t in a high enough tax bracket or don’t own a home expensive enough to generate substantial tax savings on interest payments.