Today Q2 2011 Rent vs. Buy Index was released, which compares the cost of buying and renting a two-bedroom apartment, condominium or townhouse in the 50 largest U.S. cities.
Since last quarter, buying a home has become more affordable than renting in nearly four out of five (80 percent) major cities; only in New York, Fort Worth and Kansas City was renting a less costly option than buying. It is cheaper to buy a home than to rent in 39 of the nation’s 50 biggest cities, according to a Trulia quarterly report released today by this national real estate search and marketing company.
Locally in Pensacola, Florida the rental market has been tightening up for months while the cost to buy real estate is as low as it was in 2003. This coupled with mortgage rates near historic lows, make the proposition for buying verses renting better than it has been in many years.
Update – Apartment rents are rising
WASHINGTON – May 6, 2011 – Apartment rents are rising at their fastest pace in years as the U.S. economy creates jobs and spurs demand for rental housing.
Nationwide, rents started edging up last year after several years of little growth or even declines, market researcher Reis says. It predicts apartment rents will jump 4.3 percent this year, marking the biggest annual increase in four years. MPF Research, which also monitors apartment rents, expects them to rise more than 5 percent this year, says Greg Willett, MPF Research vice president.
Job growth is driving much of the increase. As more people get jobs, people who doubled up in homes during the recession, especially younger workers, move out on their own, says Ryan Severino, Reis senior economist. Many of those workers are choosing to rent rather than to buy, because of dropping U.S. home values and tight lending standards that make it harder to buy homes, Severino says.
Lack of construction is also helping rents. This year, Reis expects just 40,000 new apartment units added to the U.S. supply. That’s down from about 130,000 new units each year for much of the past decade.
Apartments make up about half the nation’s rental supply, Willett says. Single-family homes and condominiums account for the rest.
Increasing demand and lack of new rental supply will boost rents for the next couple of years, predicts Paul Dales, economist at Capital Economics. Eventually, though, as rents rise and home prices drop, “homeownership becomes more valuable again,” says Jim O’Sullivan, chief economist at MF Global.