Despite high home prices, putting off a purchase to wait for a better deal may not be the best idea after all. Long-term, owning is more affordable than renting almost anywhere in the country, according to a new report released by home search platform Homesnap.
Once the down payment is made, American homeowners will, on average, spend 25.1 percent of their monthly income on their housing. Renters, meanwhile, will spend 37.9 percent of their income on housing, in no small part because the mortgage payments end up being lower and more predictable.
Looking at factors like the average monthly wages, monthly rents, monthly rental insurance payments and median home values, Homesnap has found that owning is more affordable than renting in 94.39 percent of cities in the United States.
Some of the most stark distinctions can be seen in Miami, where renters spend 66.7 percent of their monthly income on housing while owners spend 34.6 percent on the same expense after the down payment is made. Denver, too, has a dramatic difference: 51.4 percent for renters vs. 31.6 percent for owners, respectively.
“Although purchasing a home is a costly undertaking, long-term benefits of owning versus renting are significant,” reads the report. “Median home prices are predicted to continue rising throughout 2020 — there has been a 8.05 percent increase in home prices nationwide over the past three years.”
As a result, those who are able to scrounge up enough cash for a down payment through savings, loans or family help will be at a clear financial advantage later on. That said, high prices and the dearth of affordable homes on the market is still a major concern for first-time buyers and push many out of the buying market completely.
Based on an earlier CoreLogic report, 44 percent of millennials consider buying a home to be entirely out of reach while many others are waiting for market conditions to change before they start the homebuying process.