When I met with a woman to talk about getting their home ready to sell recently, she said that their son is following in his sister's footsteps… now also talking about buying. Both came to the conclusion that it makes more sense to buy than rent right now, with rent prices continuing to rise.
At our open house on Sunday we found buyers out in droves, looking for someplace to buy instead of continuing to rent…for most people who can afford to buy, buying is less expensive than renting. Trulia's latest Rent vs. Buy Report focuses on Millenials (age 25-34) and concludes that nationwide buying a home is 36% less expensive than renting. Using their Rent vs Buy Calculator it would appear that Twin Cities renters who can afford to buy would likely save more than 30% by buying.
Take this delightful St. Paul house below, listed at $235,000 (had offers the second day on the market) in the affordable Payne-Phalen neighborhood. (Find out why this neighborhood has been called the next hot St. Paul neighborhood… and why these sellers planned to stay for 5 years but ended up staying for 15 because they liked it so much!)
Using the Trulia Rent vs Buy Calculator with 5% down conventional 30-year financing and interest rate of 3.75%, buying would be 33% cheaper targeting a monthly payment of $1,450. The calculator figures $1,380/month renting costs and $920/month buying costs taking into account the deductions you get to take on your taxes and money you are paying yourself back each time you make your mortgage payment.