Home prices have increased in a hurry the last year, but has that made homeownership any less practical in certain markets?
In the immediate years after the housing bubble popped, the answer to “rent or buy?” was an easy one. After all, with home prices falling and rents rising, it made almost too much sense to buy, especially in markets with a diverse, affordable range of homes to buy.
Fast forward to 2014, though, and the answer is not so clear cut, what with home prices rising by double-digit levels from the year before. All of the sudden, the question is once again valid – rent or buy?
Thankfully, new research that Deutsche Bank provided The Wall Street Journal helps us answer that question. Comparing average monthly rents as a percentage of the estimated monthly mortgage payments in the nation’s largest metro areas, Deutsche Bank then assigned a specific percentage to each housing market. As long as the percentage was above 100 percent, it made more sense to own (but that’s assuming, of course, a 30-year mortgage with a 5 percent downpayment, and that the buyer is in the 25 percent income-tax bracket).
So what did Deutsche Bank uncover? See our graph to find out: