Is it cheaper to buy a home than it is to rent a home? In some cities, renting is more expensive than buying!
Trulia.com recently released its new Buy vs. Rent index, ranking the top 10 cities in the United States where buying a home makes most financial sense. Minneapolis (and by close relation St. Paul and most of the metro area) has landed on that list. Though Minneapolis didn't see the same huge spike in real estate prices that other communities experienced during the housing boom, once prices started dropping, home ownership became really cheap.
In Minneapolis, the average listing price for a home placed on the real estate market is $153,844. A 30-year fixed rate mortgage for that amount locked in at the rate of 4.638% APR would result in a monthly payment of approximately $768. The average monthly price for renting a home in Minneapolis is $1,700. Other cities where it is cheaper to buy than rent include Miami, Fresno, Phoenix, El Paso, and Las Vegas.
Curiously, Minneapolis is the only northern city which landed on this list, while quite a few landed on the list where it's much cheaper to rent than buy. Cities where it is cheaper to rent include Portland, Seattle, Omaha, Cleveland, and New York.
Ultimately, the decision to buy or rent is up to an individual or family's financial situation. Though homeownership enables people to build equity over the long term, the costs of paying for a home go beyond the monthly mortgage payment. Though no equity is built by renting, sometimes personal lifestyles may make renting a better choice.
Considering buying a first home? Contact the Twin Cities Realtors at Barker & Hedges o see how they can help you determine if buying a home is the right step for you!