Friday, July 14, 2017 / by Joe Corbisiero
Right now it is cheaper in the long run to buy a home than rent in San Diego County, but the cost benefits aren’t as high compared to much of the nation.
It is about 32 percent cheaper to buy than rent in San Diego, said Trulia’s Rent vs. Buy study released Thursday. Buyers in 85 of the nation’s largest metros, however, see more of a benefit, including Boston, Salt Lake City, New York, Atlanta, Philadelphia and Detroit.
While San Diego’s rents are high, the gap between home prices and leasing isn’t as extreme as in other cities. For instance, in West Palm Beach, Fla., the median home price is $241,509 and monthly rent is $1,950 — making buying a home there 53 percent cheaper than renting.Consumers gain the least from buying in Honolulu, where the $629,606 median home price and $2,500 monthly rent make it only 17 percent cheaper to get a home of your own.
Other places where buying is an even tougher sell than San Diego: San Jose, San Francisco, Milwaukee, Newark, Madison, Ventura County and Orange County.
Trulia had a few caveats in its study. It assumes homeowners will stay put for at least seven years, have money for a 20 percent down payment and closing costs.
On the plus side for prospective homeowners, the Trulia study said in increase in mortgage rates shouldn’t dampen prospects. Mortgage rates, which have been hovering near record lows for quite some time, would have to increase by 3.5 percent to make renting cheaper.
The interest rate in San Diego County was 3.47 percent at the start of October for a 30-year fixed rate mortgage, said HSH.com. The median home price was $498,000 in August, said CoreLogic, and the average rent was $1,743 a month at the start of September, said MarketPointe Realty Advisors. There is no median rent report readily available for San Diego County, but MarketPointe’s average includes studios, as well as one-, two-, three- and four-bedroom units.
Given current numbers, the typical San Diego County monthly mortgage cost, around $1,782, would be about $39 more a month than the average rent — after putting 20 percent down, or $99,600.
Perhaps more realistic for a first-time buyer, the median sale price of a resale condo was $377,750 in August. Given mortgage rates at the time and coming up with 20 percent down, $75,550, the monthly mortgage payments would be nearly $400 less than the average rent.
Yet, there are other factors to consider, such as homeowner association fees, home maintenance and property tax. There is also tax and interest write-offs that come with ownership and payments could be higher by putting 10 percent down instead of 20 percent.