Rent in San Francisco, but buy in Detroit
- You're better off renting with a roommate than buying your first home alone in cities such as San Jose and San Francisco, according to online real estate site Trulia.
- Sacramento and Ventura County, California, and Austin, Texas, are other metro areas where renting with others outweighs buying.
- Detroit sees the greatest savings from buying. Purchasing a starter home in West Palm Beach, Florida, is also a bargain over renting with a roommate.
You're better off renting with a roommate than buying your first home alone in cities such as San Jose and San Francisco, California, and Austin, Texas, according to a recent report by online real estate site, Trulia.
When conducting their analysis, Trulia assumed buyers would be taking on a 30-year fixed rate loan, front a 20 percent down payment, and stay in the same place for seven years. Their calculations used median rent and median starter home prices.
Renting with a roommate is overwhelmingly the better option over buying a starter home in the nation's two most expensive markets. In San Francisco, the savings from renting compared to buying is 16.5 percent.
In nearby San Jose, the savings from renting over buying was just under 22 percent.
Sacramento and Ventura County, California, and Austin, Texas, are other metro areas where renting outweighs buying.
Detroit enjoys the greatest savings from buying. Purchasing a starter home in West Palm Beach, Florida, is also a bargain over renting with a roommate, where you save more than 52 percent, according to Trulia.
One caveat: "If you're pretty confident that you're going to be in a place for five to seven years, buying almost always outweighs renting," said Cheryl Young, senior economist at Trulia and author of the report.
Although buying tends to be cheaper, Young still recognizes the challenges that those seeking to become new homeowners face.
"We know that starter home inventory — this is an era of really low inventory — is decreasing every quarter. I think since last year, starter home inventory has gone down like 21 percent. So it's really tough for the first time home buyer," she said. (Click on image below to enlarge.)