If you need assistance, please call 760-201-9252

Is It Better to Buy or Rent Right Now?

Friday, July 14, 2017   /   by Joe Corbisiero

Is It Better to Buy or Rent Right Now?

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.

First-time homeowners and millennials, in particular, may struggle to make down payments because of wages not going up as fast as home prices and student loan payments

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.

Joe Corbisiero
2165 San Diego Ave Suite 201
San Diego, CA 92110
CA DRE# 01886351

This information is deemed reliable but not guaranteed. You should rely on this information only to decide whether or not to further investigate a particular property. BEFORE MAKING ANY OTHER DECISION, YOU SHOULD PERSONALLY INVESTIGATE THE FACTS (e.g. square footage and lot size) with the assistance of an appropriate professional. You may use this information only to identify properties you may be interested in investigating further. All uses except for personal, non-commercial use in accordance with the foregoing purpose are prohibited. Redistribution or copying of this information, any photographs or video tours is strictly prohibited. This information is derived from the Internet Data Exchange (IDX) service provided by San Diego MLS®. Displayed property listings may be held by a brokerage firm other than the broker and/or agent responsible for this display. The information and any photographs and video tours and the compilation from which they are derived is protected by copyright. Compilation © 2021 San Diego MLS®, Inc.
This site powered by CINC: www.cincpro.com