Home buying could soon beat renting

By John W. Schoen, Senior Producer
 
Falling home prices have sent many would-be buyers to the sidelines. If all goes well, record low interest rates and rising rents may soon prompt some of them to take a second look at buying.

Unfortunately, that’s a big “if,” according to Paul Diggle, a housing economist at Capital Economics.

Much of the decision to buy a house still depends on your personal finances and preferences, your career or family life, or level of financial security.

But if you’re comparing just the cost of owning and renting, buying a house may soon be the better choice, according to Diggle.

Until recently, home ownership was no bargain compared to renting, according to his analysis.  A 33 percent drop fall in home prices, a plunge in mortgage rates and 15 percent rise in rents since the housing crash has evened the scales. Today, the median monthly mortgage payment of about $700 has fallen to about the level of a median monthly rent check. If mortgage rates keep falling and rents keep rising, the equation will tip even further toward owning.

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