Mortgage rates and home prices have fallen so much that the current cost of owning a home is now cheaper than it has been at any point in time in the last 15 years. Now mortgage payments are becoming more affordable than renting an apartment or home in many of the major metropolitan areas across the United States.
Home prices have dropped so low, that in many markets it's cheaper to buy than rent.
The third quarter survey of housing market conditions conducted by the Wall Street Journal evaluating data comprised from 28 of the nation’s largest metropolitan areas discovered that home values fell in all but 5 of the areas when compared to the second quarter of 2011, according to figures obtained from Zillow Inc. While home values declined in most areas across the U.S., rent levels have risen rapidly.
Mortgage rates have been hovering around 4% for months. That rate is the lowest seen in nearly six decades. Consequently, payments on a monthly mortgage for a median prices home are now lower than the average rent levels in 12 metropolitan areas tracked out of 27 by Marcus & Millchap, a real-estate brokerage that compiled data for The Wall Street Journal. According to the data, it is more affordable to rent than it is to buy in 15 of the metropolitan areas tracked, but that ratio could change quickly.
Mortgages do carry other costs that are not associated with renting. Home ownership carries costs such as property taxes, insurance, home owners association fees and maintenance. These additional costs are why many individuals choose to rent. Other potential buyers are unable to purchase a home, despite the favorable home prices and mortgage rates, because lending conditions are much more strict now than they were a few years ago.
With mortgage rates and home prices so affordable, owning a home is more appealing than ever considering that rent is expected to rise by 4% this year. Even in cities where it is still cheaper to rent than to purchase a home, the cost of buying a home has become so affordable that it almost seems like a bad idea not to try to qualify for the home loan and take the plunge into home ownership.
See also:
Homebuilders Profits Adversely Affected By Housing Market
Strict Lending Standards Hamper Housing
