It is now cheaper to buy than rent in 72% of the major metros in the US, according to Trulia, a real estate data network. Several Texas cities made the list, including Arlington, San Antonio, El Paso, Dallas, Houston, and Austin.
According to Pete Flint, Trulia’s CEO, it’s simple supply and demand economics at work. “Since the start of the ‘Great Recession,’ many former homeowners have flooded the rental market. Following the principles of supply and demand, renting has become relatively more expensive than buying in most markets.”
Stricter underwriting standards are forcing many potential homebuyers to remain renters. Additional rental demand comes from those forced out of their homes due to foreclosure. Trulia’s findings also reflect the fact that home affordability is rising due to declining home prices and low interest rates.
The Trulia index divides the median list price for two-bedroom homes by the median rent on two bedroom apartments, condos, and town homes listed on Trulia.com. If the index is less than 15, owning a home is much less expensive than renting. The index considers the total cost of homeownership, including property taxes, insurance, homeowner’s fees, and closing costs, and the total cost of renting, including renter’s insurance.
Arlington topped the list of Texas cities with an index of 6. San Antonio and El Paso had an index of 11, followed by Dallas (12), Houston (13), and Austin (15). Only one Texas city, Ft. Worth (19) had an index greater than 15, but Trulia suggests that at this level buying still may make financial sense depending on the situation. No Texas cities had an index of 21 or higher, the level at which Trulia suggests that renting is much less expensive than buying a home.