If It’s Cheaper to Buy than Rent, Why are So Many People Renting?

Cutter Lane, Ranch Place

Homeowners are choosing, or being forced, to rent rather than buy even though the latter is cheaper in many markets, including Park City. “As rents rise and prices stagnate, homeownership is becoming even more affordable, but rising rents create a dilemma for people who can’t afford to buy yet,” says Jed Kolko, Trulia’s chief economist. “Rising rents make it harder for people to save for a down payment, which is the biggest barrier to buying a home that aspiring homeowners face.” In fact, many experts are predicting rents will rise 3-4% each year over the next two years.

In Park City, the payments on a home that would sell for $600,000 would be $1800/month (with 20% down payment and a conservative fixed interest rate of 4.5%). The same home would probably cost $2200-$2500/month to rent.

What does this mean for you? If you are renting and can afford to buy a home, what are you waiting for? If already own your own home and are looking for a predictable income stream, then you should consider a single family investment property.

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