New Orleans, Chicago and Pittsburgh offer the best opportunities
of ConsumerAffairs
The lack of affordability has caused many prospective home buyers to resign themselves to renting. But, as mortgage rates have steadily declined, home ownership might be a more attractive option, depending on where you live.
A new study from real estate marketplace Zillow shows a monthly mortgage payment is actually less expensive than rent in 22 of the 50 largest U.S. metros.
New Orleans, Chicago and Pittsburgh offer the greatest savings when comparing the cost of rent to a mortgage payment, before taxes and insurance, and assuming a buyer can put 20% down. For those who can put together a down payment, buying a home in these cities can be the right move.
For example, in Chicago, the typical rent payment is $2,074 per month. A monthly mortgage payment, Zillow says, is only $1,640, ressulting in a savings of $434 a month by owning rather than renting.
In New Orleans, homeowners can also save nearly $450 a month paying a mortgage rather than renting, and in Pittsburgh, the savings are about $320 a month, according to the Zillow research. These savings are even more surprising when considering that homes for sale tend to be larger than the typical rental.
What helps is the fact that home prices in Chicago, New Orleans and Pittsburgh did not escalate to the degree some other markets did beginning in 2020. The median sale prices in those markets are well below the national average.
It also helps that mortgage rates are declining, with the average 30-year fixed-rate mortgage now below 6.5%. The Federal Reserves rate cut this week doesnt directly affect mortgage rates but as the yield on the Treasurys 10-year bond goes down, so will mortgage rates.
"This analysis shows homeownership may be more within reach than most renters think," said Zillow Home Loans Senior Economist Orphe Divounguy.
"Coming up with the down payment is still a huge barrier, but for those who can make it work, homeownership may come with lower monthly costs and the ability to build long-term wealth in the form of home equity something you lose out on as a renter. With mortgage rates dropping, it's a great time to see how your affordability has changed and if it makes more sense to buy than rent."
Photo Credit: Consumer Affairs News Department Images
Posted: 2024-09-19 18:01:54
