In our rent vs. buy calculations, we use a conservative annual home price assumption that ranges bet

Trulia determined that buying is 34 percent cheaper than renting in the region, up from 31 percent in favor of buying back in September. However, the real estate site predicts that this gap will likely narrow with rising interest rates and home prices:
Some markets might tip in favor of renting this year as prices continue to rise faster than rents and if as most economists expect mortgage rates rise, due both to the strengthening economy and Fed tapering.
Now with rent-versus-buy analyses, there are always questions about methodology, so Trulia has laid out the step-by-step path they used to come up with rent-vs-buy determinations in metro areas around the country.
In short, Trulia s team compared the average rent and for-sale prices of an identical set of properties in each city, and then considered the present and future monthly costs associated with buying and renting and factored in one-time costs like down payments and security deposits.
Trulia assumed that owners will have a 4.5 percent rate on a 30-year mortgage, put 20 percent down and will stay in their homes for seven years. However, they also created an interactive map to see how the numbers work with different assumptions. For example, if someone in the DC-area has a 4.7 percent interest rate on their mortgage, but plans on staying in their home for just five years, buying is 25 percent cheaper than renting. With plans to move after three years, the advantage of buying over renting drops off almost completely.
In our rent vs. buy calculations, we use a conservative annual home price assumption that ranges between 1.7% and 3.1%, depending on the metro. The reality, though, is that there s a huge degree of uncertainty about what home prices will actually do, and the cost of buying relative to renting could turn out to be a lot higher or lower than with our conservative baseline appreciation assumption. To see how much uncertainty there is around what could happen to home prices, we calculated the annual home price appreciation for the best and worst seven-year periods over the past 20 years for each metro, how to get dirt cheap airline tickets from nc to ca using Federal Housing Finance Agency ( FHFA ) price data.
You ll see in the link about Trulia s methodology that we included in the 5th paragraph how to get dirt cheap airline tickets from nc to ca that they include how to get dirt cheap airline tickets from nc to ca monthly how to get dirt cheap airline tickets from nc to ca costs, like insurance, taxes, and maintenance how to get dirt cheap airline tickets from nc to ca for home ownership in their calculations.
Or even costs associated with keeping the property in sellable shape such as painting and replacing the kitchens and baths every 20 years? how to get dirt cheap airline tickets from nc to ca These all add up to a lot of money that most buyers how to get dirt cheap airline tickets from nc to ca don t think about.
Remodeling every 20 years (which you are probably only going to do once) is MUCH cheaper than the sky-high rents you will be paying for a apartment every single month. Not to mention those remodels are an investment that only make your property more valuable when you sell. You don t recoup any of the money you sink into rents.
All of that matters, kitchen replacements, etc. But look at it this way, if you are in a property for 20 years your cost are going to be way below rental by that point. You may have 10 years left on a mortgage and then you are free and clear, if not sooner.
I don t know anyone who has been able to afford putting 20% down on a home - on a $500k property, that s $100k! If we look at the FHA minimum downpayment (which I see far more often), you re looking at a 3.5%, which has a big affect on your mortgage payment.
@Lisa - As far as condo fees, I pay around $315 per month but that includes all utilities. Total mortgage after condo fees added in is about $1400 for a studio condo, which is probably cheaper than most studios in DC, and I live in the city. Some condos (and I looked believe me) would only include electric, water + rest is on the owner.