But nationally homeownership still makes most sense
Homebuying remains a key part of the American dream and even the often more transient Millennials generation still see the value of becoming first-time buyers.
But in some markets, the math just doesn’t add up.
An analysis by RewardExpert.com shows that homeownership still makes more sense financially than renting in more than half of the 281 metropolitan markets studied but that aggregate rent outstrips the cost of home ownership in less than twenty years in only five metros.
Using Trulia data on home prices and monthly rents, the study determined in which areas it is most advantageous to rent and in which it is most advantageous to buy a home at the local average price, with a 30-year fixed-rate mortgage and a 20% down payment.
Where to rent, where to own
The market where renting appears to make most sense is the combined San Francisco Bay Area / Silicon Valley region of California. Here the cost of buying the average priced home (excluding closing costs, property taxes, and insurance) totals $2,146,000 which equates to 49.56 years of renting at an average $1,295,000 based on May 2018 averages.
Conversely, buying makes most sense in Naples-Immokalee-Marco Island, FL where the down payment and total principal and interest payments on an average home comes out to $694,000, while renting would total $1,260,000 over the lifetime of a 30-year mortgage. That puts buyers ahead after 16.52 years.
