In stark contrast to Canada, where it’s estimated that houses are overpriced by 74% compared to rental prices, buying a home in the United States is reportedly 35% more affordable than renting (it was 45% more affordable one year ago). In the full story at Bloomberg (see U.S. Homebuying Math Bolstered by Bernanke’s Surprise), it’s reported that the cost of homeownership is cheaper than renting by at least 20% for buyers in Orange County, California, the New York area, New Jersey, and San Diego. In Honolulu, the affordability gap has narrowed faster, making it 10% less expensive to buy than rent, compared with 24% last year. In San Francisco, where home values gained 24.5% in June from a year ago, owning is now cheaper than renting by just 9%, compared with 28% a year ago. San Jose, California, where it’s 4% cheaper to buy, is closest to reaching a tipping point, the data show. Buying a home is most affordable in Detroit, Gary, Indiana, Memphis, Tennessee, and Cleveland.
This regional data was all provided by the powerfully transparent U.S. real estate site Trulia, which just today launched their most sophisticated Rent vs. Buy Calculator to date. The calculator enables users to determine whether it’s cheaper to rent or buy in any market. And by tweaking the home price, a renter can even pinpoint the price of a home that would cost the same to own, on a monthly basis, as that person’s current rent (Source).