Historically, people have willingly decided that they will pay a bit more each month in order to be homeowners rather than renters. Several studies show that in 1999, rental costs were approximately 86 percent of the (after tax) mortgage payment for single family houses and condominiums of a similar square footage in the same area.
In 2006, when the price of homes escalated, rents had dropped to approximately 60 percent of the mortgage payments, after taxes. In some real estate markets, homeowners were actually paying up to twice or even three times the monthly amount as renters for a comparable rental unit in the same neighborhood.
The 1999 ratio of rental to homeowner costs of approximately 86 percent stayed fairly consistent until around 2000, when the rapid rise in the price of homes began. Using that figure as a guide, we are able to state that home prices may well be beginning to stabilize as, by the beginning of November, 2009, rents were up to approximately 82 percent of the cost of owning a home.
As prices for renting versus owning vary depending on the market, be sure to check your local area.
|
