Buy vs rent datapoint of the day
Alex Veiga has lots of good datapoints on renting vs buying across the country. The main result is that buying is still more expensive than renting, but that the gap is narrowing sharply:
An Associated Press analysis of 45 metro areas finds the gap between the monthly mortgage payment on a median-priced home and the median rent has shrunk from $777 a month to just $221 in the past three years.
My feeling is that the gap is going to continue to narrow, until it becomes negative. And then I’m not sure what happens: if a large number of renters start buying, that of necessity is going to mean rents falling further.
But already, for the right people in the right place, some sales work out significantly cheaper than renting:
Jere Ross, an Air Force vehicle operator, and his wife recently bought a four-bedroom, 1 1/2-bath house in Zephyrhills, Fla., a Tampa suburb, for $86,500 rather than jump into another yearlong apartment lease.
Ross, 23, used a Veterans Administration loan, which doesn’t require a down payment, and got a 30-year mortgage at a fixed rate of 5.5 percent. His monthly payment comes to $700 a month, including property taxes and insurance — $110 less than he paid to rent an apartment nearly half the size.
The most interesting news from a blogger perspective, however, is that Dean Baker, one of the earliest and most vehement housing bears, has just shelled out $650,000 on a 5-bedroom house. Sounds like a good deal to me, but then again I live in Manhattan.