Photo by Brandon Griggs on Unsplash
I think we can all agree that interest rates are still low, but they are certainly not the lowest we’ve seen in recent years. Compounded with the fact home values are on the rise and we’re seeing a so-called housing shortage… it would appear that renting a home might be your best bet if you want to live in one of our country’s larger metropolitan cities and now get this… it might be more affordable.
A new study conducted by the Urban Institute calculated the “rent gap” in our nation’s 33 largest metropolitan areas. The “rent gap” calculation looks at the home purchase figures and rental affordability in these areas to determine the difference between the cost of owning vs. renting. The study showed that it’s more affordable to rent in 16 out of the largest 33 cities. You can look at the studies and the corresponding article here.
What’s interesting here is that despite being more affordable… it’s probably easier to just buy a home in one of these areas. The average FICO needed to a rent a property in these areas is around 700. Which means a borrower/renter in a lower credit bracket would have an easier time getting approved for a home loan than a rental. I think something is off here… it’s more affordable to rent in these booming metro areas, but it’s harder to get approved? I’m confused. To be honest, I think that getting to the bottom of the Rent vs. Buy debate is impossible. It’s so dependent on the actual person, their credit standards, their personal preference, debt… etc., etc. I’m not sure we’ll ever see a definitive winner in this battle.
The opinions expressed in this post are the sole view of the writer and do not reflect the opinion of Princeton Mortgage Corporation.