Survey Shows Mortgages are Cheaper than Rent
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UPDATED: Nov 29, 2011
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Owning a home is proving to be less expensive than renting as the average mortgage payment has dropped below that of rent payments in 12 metropolitan areas, as reported by the Wall Street Journal.
Out of 27 areas surveyed, 15 still remain cheaper to rent than to buy, this new development of almost half of those areas being cheaper to own than to rent sheds some optimistic light on our long-suffering housing market. If that number continues to rise, then the nation may begin to see an exodus towards home ownership again.
Take for instance Atlanta, Georgia. According to the Wall Street Journal’s report, this city is boasting an average home payment of $539 when owners put 20 percent down, whereas that city’s average rent rests at $840—over $300 dollars higher.
But as of now, the affordability has done little to lift the injured market back on to its feet.
“It’s one of the most striking developments of the housing downturn,” said Paul Dales, an economist at Capital Economics. “The initial building blocks for a recovery are in place, but the legacy of the recession is really preventing households from taking advantage,” as reported by the Wall Street Journal.
Much like how people continued to horde money and avoid banks after the Great Depression, the public’s view of real estate has been distorted to the point that they are refusing to enter the housing arena, even as prices hover right around what they pay to rent.
Setting aside the public’s negative outlook on the housing market, though, there are other factors contributing to the encumbered recovery. There are those who are willing to buy a new home but are simply unable to. Given the market’s low demand and massive supply of homes, current homeowners are having difficulty liquidating their house before upgrading to a new property.
But on an individual’s level, there’s no pressure to take out a home loan just yet. In August, the Federal Reserve announced interest rates would remain at the near record-breaking low levels we see today for at least another two years.