Buying a home instead of renting is now more affordable in 98 out of 100 major metro areas, including the New York metro area, according to a report recently released by real estate company Trulia.
Particularly in struggling markets with slow growth, a surfeit of surplus housing and lots of land — such as Detroit – buying makes a lot of sense, Trulia says. The company attributes the trend to declining home prices and tightening rental markets.
But don’t run out and apply for a mortgage just yet. In Manhattan, Brooklyn and Staten Island, priced-out city dwellers have driven up prices to a point where renting still makes the most sense, Trulia says. However, the company’s Rent vs. Buy Ratio swings in favor of buying in Queens and the Bronx, as well as Nassau and Westchester counties in New York and Hudson and Bergen counties in New Jersey.
Another factor Trulia considered in its calculations was the number of bedrooms in a home. In the New York area, smaller apartments were a better buy, while properties with more bedrooms were more affordable to rent.
The problem with the general trend toward rising rents and lower home prices is that renters often cannot scrape together enough for a down payment, according to Jed Kolko, Trulia’s chief economist.
“As rents rise and prices stagnate, home ownership is becoming even more affordable, but rising rents create a dilemma for people who can’t afford to buy yet,” he said. “Rising rents make it harder for people to save for a down payment, which is the biggest barrier to buying a home that aspiring homeowners face.”
Still, considering Trulia’s findings, it’s hardly a surprise that neighborhoods like the Grand Concourse area in the South Bronx are undergoing something of a revival. Brokers should keep tabs on up-and-coming areas that offer reasonable deals for clients who are looking to make a purchase.