In the time that’s lapsed since the first post in the Rent VS Buy in the Puget Sound Region series, interest rates have dropped. This week, they averaged around 4.13% for a 30 year fixed mortgage, per Freddie Mac. That is the lowest rate we’ve seen in the last 4 months. Also, local home prices in September experienced modest gains compared to the summer months. For consumers who currently rent and have been examining the merits of home ownership, the reduction is interest rates and slowing of home price increases is especially noteworthy. Furthermore, homeowners who want to sell and change their lifestyles need to examine if buying a smaller place, rather than renting, would meet their goals while potentially saving them money.
Trulia once again crunched numbers for the 100 largest metros in the U.S., to examine the rent vs buy question. Nation-wide, purchasing a home still is a better bargain that renting a home over the long run. The statistics revealed it’s still 35% less expensive to buy, on average, than it is to rent. However, the gap is definitely narrowing in some of the 100 metros examined. According to the Trulia’s Interactive Rent Vs Buy Map, here in the Greater Seattle area it’s 31% cheaper to purchase a home under the following conditions: 4.8% 30 year fixed mortgage rate (where interest rates were at during mid-September), you’re within the 25% tax bracket and plan to remain in your home home 7+ years. Take some time to explore this interactive map, to see what elements needs to be in place to make a home purchase more expensive than renting. You will find that in most of the scenarios you can create, buying will save you money.
Trulia also created an interactive Rent Versus Buy Calculator for consumers to create scenarios that mirror their fiscal circumstances and what they are looking for in a payment for housing within the metro area they would like to live in. This tool is very helpful to give you a snapshot of what your potential home costs would be if you decide to rent or buy and compare those costs to where you are at financially.
Interest rates are projected to go back up in 2014. Use these tools Trulia developed to look at the costs of renting verus buying in the Greater Seattle area under various interest rates and financial components. If buying a home makes more sense for you financially, please consider discussing your housing options with a real estate professional. Any of the agents at Windermere Real Estate/Mercer Island would love to consult with you. Call our office today (206.232.0446) to schedule a consultation.