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When Buying Becomes Cheaper Than Renting

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Rent Versus Buy


In any rational world, renting is supposed to be cheaper than buying a home. As a matter of fact, historically this has been one of the benefits of investing in rental properties – ongoing, steady demand.  That said, it seems like we’ve stepped into an alternative reality in recent months, because in the current scheme of things most people would probably be much better off buying a property than living in a rental home.

Counting back 12 months from March 2012, home prices have fallen by an average of 0.7% while average rents have increased by a hard hitting 5%. Certain metro areas report more dizzying numbers like a whopping yearly rental increase of 12.9% and 12.1% in Florida and Miami, respectively.  A logical explanation for these numbers has been presented by another study which reveals a decline in apartment vacancy rates to below 5% for the first time since 2001. With a shortage in apartment rentals amidst rising demand, these numbers can only get worse.

Given the state of affairs, buying a home seems to be the only sensible way to proceed for the average person. The falling property values should offer the final incentive to anyone who is still undecided. However, high unemployment, hard-to-come-by credit, and the sheer shortage of constructible land is forcing the average American to live with his or her current situation – for better or for worse. If they could really become homeowners, it could perhaps have been the first step towards easing the real estate market crisis.  For more on this story, click here.

One Response to When Buying Becomes Cheaper Than Renting

  1. E says:

    So does this mean if you invest NOW in rental property, you will be on the down side of the market when unemployment drops and credit eases, especially for those markets that weren’t hit that hard in the first place? I’m wondering if the time has passed for rental investments in the smaller metro areas.

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