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Housing market: Cheaper to rent or to buy?

April 6, 2012 12:00:00 AM PDT
Is it better to buy a home, or rent? The experts say for the first time in a long time, the smart money is on buying that home. But you'd better act fast.

Looking around town, there's no shortage of housing options, whether you want to rent or whether you decide to buy. But which is your better option?

For many, it's really a matter of money. But some experts say for the first time since way before the housing bubble burst, it's better to buy.

"You have to go back at least 10 years before a time when you can see buying this affordable relative to renting," said economist Jed Kolko, Trulia.com.

Kolko put together these numbers, the ratio of home prices to rental rates. Basically, he says any number below 15 means it's better to buy.

  • Orange County: 13.5
  • L.A. County: 13
  • Ventura County: 11.8
  • Inland Empire: 9.1

And compared with last year, home prices in the Inland Empire have dropped by 1.7 percent and rents have risen 2.5 percent.

"Most of the time buying is more affordable than renting in the U.S., in part because the mortgage interest deduction helps make the cost of buying lower relative to renting," said Kolko.

According to Trulia, there may not be such a big advantage to buying for long, because they say housing prices are sure to start rising, at the same time many apartment complexes are finishing construction, so they'll be back onto the market, so rental prices, they say, will start to drop.


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