San Jose real estate is among the metro areas showing slim margins when comparing the cost of buying a home versus renting a home. A recent Rent vs. Buy Report released by Trulia concludes it’s cheaper to buy a home than rent a home in 100 of the biggest metro areas in the U.S. Trulia’s report claims it’s about 3.5% cheaper to buy vs. rent in the San Jose real estate market. While prices can fluctuate up and down, general trends show home prices rising. Even if home prices are rising, buying a home can maintain its potential to save you money and be a rewarding investment.
Intempus Realty provides ten years and counting of expert real estate brokerage services. We specialize in San Jose real estate and San Jose property management. Our team of experts offers our services in additional locations as well. If you are considering purchasing a home we can help you get the best deal on the perfect home.
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Trulia’s report calculates the cost of renting vs. buying with the assumption that households occupy their residency for seven years. It also assumes individuals purchasing a home can put 20% down and are using a 30-year fixed mortgage rate. The nationwide average is about 33.1% cheaper to own a home than rent.
When Trulia compared the cost of renting vs. owning among 39 states the data showed large variances. The data supports the idea that it’s either ‘a little’ cheaper or ‘a lot’ cheaper to own a home, depending on the location. San Jose is one of the few metro areas that buying a home barely outweighs renting one. In addition to San Jose the following locations have some of the slimmest margins:
- San Francisco, CA (8% cheaper)
- Urban Honolulu, HI (9.9% cheaper)
- Oakland, CA (17.2% cheaper)
- Orange County, CA (21.1% cheaper)
- New York, NY (21.6% cheaper)
- Portland, OR (22% cheaper)
- Sacramento, CA (22.3% cheaper)
- Ventura County, CA (22.9% cheaper)
- Newark, NJ (22.9% cheaper)
* Percentages are from spring 2017 Trulia report and reflect the savings to buy versus rent a home
Many of these locations are frequently listed as most expensive or least affordable places to live. San Jose’s median home price is about $977,918 and the median rent is about $3,500. For the first time in the last four years San Jose has reported margins in the single digits for the cost of buying a home vs. renting a home. Other metro areas listed in the single digits are San Francisco and Honolulu. Buying a home may be cheaper than renting even if the savings is in the single digits.
Where Is It Cheaper To Rent Vs. Own?
GoBankingRates recently performed a study that reports it may be cheaper to rent than buy a home in some states. California is not among the states they listed. Their report says it may be cheaper to rent than own a home in the following states:
- Montana
- Idaho
- Nevada
- Wyoming
- Utah
- Arizona
- Oklahoma
- Missouri
- Virginia
- North Carolina
- Hawaii
3 Reasons Buying A Home Can Make Sense
#1 Historically low interest rates.
Mortgage interest rates remain at or near historic lows contributing to the fact that buying a home can be cheaper than renting. Recent reports by Freddie Mac show the interest rate on a 30-year fixed mortgage is about 3.91%. Rent and home prices have been trending upward over the past four years. During spring 2016 to spring 2017 rent started trending downward showing a decline of about 3.5%. Rent vs. buy decisions are primarily driven by mortgage interest rates, even when rent and home prices are not moving in tandem. Mortgage interest rates are one of the main reasons most calculations still favor buying a home.
#2 Financially & socially rewarding.
Buying a home can be a better short-term and long-term investment for your money. The fact that home prices have been on the rise over the past four years helps support the decision to buy a home. Some locations can provide larger financial reward for purchasing a home.
Trulia’s report list the following areas as having larger financial benefit:
- Baton Rouge, LA (50.1% cheaper)
- Philadelphia, PA (48.3% cheaper)
- New Orleans, LA (47.9% cheaper)
- Columbia, SC (47.8% cheaper)
- Fort Lauderdale, FL (47.0% cheaper)
- Charleston, SC (47% cheaper)
- Greenville, SC (46.3% cheaper)
- Detroit, MI (46.2% cheaper)
- Birmingham, AL (45.8% cheaper)
- West Palm Beach, FL (45.7% cheaper)
* Percentages are from spring 2017 Trulia report and reflect the savings to buy versus rent a home
#3 Benefits of being a homeowner.
Becoming a homeowner is an accomplishment that many of us work hard to achieve. Purchasing a home gives you and your family an asset and a permanent place to call home. It provides a space for you to customize for your needs and make life more convenient. Renting can become exhausting after countless moves and consecutive years of rents being raised. Socially and financially buying a home can make sense for many of us.
Take advantage of low mortgage interest rates. Find the perfect San Jose home for sale today!
