Residential purchases may soon rise, which may lead to a decline in renting, as a recent report published by Trulia, buying a house or apartment is now cheaper than renting in most of the country's largest metros.
The report shows that based on the asking prices of 2012, buying is now an average of 45 percent cheaper on average than renting in the country's 100 largest metro areas if homeowners plan to stay in the city for seven years or more.
Trulia's Price and Rent Monitors indicate home prices jumped 2.3 percent year-over-year in August, while rents rose 4.7 percent. The real estate information firm notes that mortgages are currently being obtained at very low interest rates, so that cuts down on the cost of owning a home.
According to the source, in Detroit, it is approximately 70 percent cheaper to buy a property than to rent one. Also, in Honolulu, it is 24 percent cheaper to buy than lease. For consumers who intend to stay less than seven years, buying becomes less attractive every year – by five years, for example, the difference has dropped to 22 percent.
As home prices continue to rise, the ratio of buying to renting will become more level. But if the housing market continues to grow, it may soon alienate buyers looking for inexpensive housing, who will then return to renting, leading to an influx in rental applications.