Credit Suisse reported data this week putting numbers to something we already suspected: it can be less expensive to own a home than to rent.
In their research report, record low mortgage rates and home prices were credited for the percentage of median household income needed to pay the mortgage on a median-priced home being at a 30-year low. Really? A 30-year low! I know we are getting used to some of these record-breaking numbers but this is nothing to sneeze at.
Credit Suisse singled out Washington, D.C., California’s Inland Empire, Las Vegas and Phoenix as areas where it’s cheaper to own than rent.
This research confirms other reports, including pieces which I have blogged about this year. I went back to that New York Times calculator which figured that buying is better than renting after six years in a home. I made just one change – the mortgage rate. And I inputted 4.8 percent (even though rates have been lower) just because my most recent client locked in at that rate. This one change reconfigured the New York Times estimate to buying being better than renting after five years. The mortgage rate is hugely influential in what a great time it is to buy right now.
I know I’ve said it before and I’ll say it again: real estate is still a good investment. I’m not saying that we are necessarily out of the woods yet. However, with home prices stabilizing and the mortgage rates still incredibly low, it is a good time to buy a home. The inventory in Phoenix has been really good as well. Whether you’re looking for a single-family home on a golf course in Scottsdale or a two-bedroom condo in downtown Phoenix, there are many options out there.
In summary, the Credit Suisse report is more good news, especially for the Phoenix market. Looking at it that way, this might be a good time to buy a home, after all.
If you are looking to buy or sell your home, contact me. I love connecting homebuyers to their dream house and helping homeowners sell and relocate.
And – remember – stay cool out there! It was another warm day in Phoenix.
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