For years, renting was seen as the more cost-effective alternative to owning, and generally, the viewpoint made sense. Renting lacks the property taxes, upkeep and other fees that often come with owning a home, and the skyrocketing prices of the boom years doubled down on those advantages.
With the boom a thing of the past, though, and houses at their most affordable level in 40 years, new CoreLogic data reported by Steve Cook of Real Estate Economy Watch is shedding new, unexpected light on the affordable nature of renting.
“Renters now spend five percent more of their household budgets on housing costs than do homeowners, and the difference is growing as rents rise,” Cook reports. “Since 2005, homeowners’ expenditures for housing have risen from 31.9 percent of their household budget to 33.2 percent, but renters’ costs have risen even more from 35.6 percent to 38.4 percent.”
Cook also reports that since 1985, renters have increased their housing expenditures by 22 percent, which is 10 percent more than homeowners.
The CoreLogic data is further confirmation of what media outlets have been reporting for months – that with home values at the bottom of the ocean, buying is more affordable than renting in major metropolitan areas.
For further analysis, the MLS website Trulia has been particularly active in topic. The website has constantly updated its wonderfully interactive Rent vs. Buy Index and issued press releases, all proclaiming the sudden affordability of urban housing.