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A study from Trulia shows it is cheaper to buy than rent in the 100 largest metropolitan areas of the United States:

With a 20% down payment, a 30-year fixed mortgage rate at 3.5% and at the 25% federal tax bracket, homeownership is cheaper than renting in all of the 100 largest metros by a wide margin. There is no market where the financial decision is even close, so long as you plan to stay in the home for at least seven years, get 3.5% mortgage, and itemize your tax deductions. However, how much cheaper it is to buy a home than to rent really depends a LOT on where you live.

In Rochester, the study found the monthly cost of home ownership is $790, while the monthly cost to rent is $1,358. Trulia based monthly costs on the average across all properties, for sale and for rent. Home ownership costs include mortgage, maintenance, insurance, property taxes, closing costs and other costs. Renting costs included rent, security deposit and insurance.

I think those rental figures are high. The 2010 census shows only 27.9 percent of housing units with a mortgage had monthly housing costs below $1,000. Only 18.1 percent of rental units cost more than $1,000 a month.

Buying a home has tax advantages and builds equity, but it’s far more economical for me to rent, according to numerous calculators. Try this one.

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3 Responses to Rent v. Buy in Rochester

  1. The low sale prices of many city homes (the slumlord special ones) skews the ownership numbers low and the ultra luxury apartments springing up skew the rent number high. Rent in the city is high because Section 8 sets a minimum benefit and those slumlords set their rent at the minimum to maximize profit so the true fair market value of an apartment in poor city areas is unable to be determined (I work with plenty of those landlords and as they say “why would I buy in Park Ave? There’s no money to be made there”). In the better areas I would expect to pay $1000+ for a decent 2 bedroom apt and up to or over $2000 for those townhouse looking ones in the burbs. Property taxes are the killer here. $4000 a year for my place in East Irondequoit, $15000 a year for co-workers McMansions in Penfield. That is why I hate the “Rochester makes affordable housing top 10 list” stories. They all ignore the taxes.

  2. One can buy a home in Western NY for the price of a car. Its supply and demand at work. No one is beating down the door to move to the rust belt so the properties are cheap.

  3. September 21, 2012 at 3:46 pm Edward Richards responds:

    Rent.

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