Trulia: Rent vs. Buy, where buying is 'much better' than renting

Trulia economist Ralph McLaughlin adds a twist to the "rent vs. buy" analysis that sheds particular light on the debate for younger adult households. Plus, there's plenty of market-by-market intelligence that ranks which ones are better for renting vs. buying.

McLaughlin's calculations include assumptions for a 3.85% mortgage rate on a 30-year fixed loan, itemized federal tax deductions and a 25% tax break. Of course, the national figure--owning is 23% cheaper than renting nationally, and in 98 of the top 100 markets--masks a world of nuance and subtlety in the market-level data. McLaughlin writes:

The rent vs. buy gap differs vastly across metros, largely because home prices and rents, property taxes, and home-price appreciation differs by metro. Taking these factors into account, young home buyers in the nation’s 100 markets would find that buying a home ranges from being 5% more expensive than renting in Honolulu to being 46% cheaper to buy a home in Houston.

The only other metro in the top 100 where buying is more expensive than renting a home for young buyers is San Jose, where they’d pay 2% more to buy a home than to rent. Rounding out the top 10 is New York, where buying is now 11% cheaper for younger consumers than renting.
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