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Is it more affordable to buy or rent a home?

Posted on Wednesday, March 5, 2014 at 9:11:44 AM

Which option is more affordable - renting, or buying? This is a question that plagues many shoppers interested in cost-efficient residential financing and their dream home, and it is a very valid concern.

According to a recent report by Trulia, the answer remains homeownership. In a study of 100 major metropolitan areas, this concept held true. However, this trend appears to be struggling to hold on, as rising mortgage rates could shift the affordability in favor of renting. For example, Honolulu and the San Francisco Bay area will turn if rates hit 6 percent. 

"Buying remains cheaper than renting across the country even after 2013's big price rebound," said Jed Kolko, chief economist at Trulia. "Mortgage rates are still near historic lows, despite rising a point in the past year, and would be the envy of time travelers from the 1980s, 1990s, or 2000s. Even in markets like San Francisco where home prices are high relative to paychecks, buying costs less than renting for people who stay seven years and itemize their deductions."

Either way, buying has its merits, according to U.S. News and World Report. The concept of owning a home is an enjoyable one, and that sense of permanence and community is hard to come by while renting. It also affords customization options, such as numerous home improvements.