General News
Meropi Kyriacou Honored as TNH Educator of the Year
NEW YORK – Meropi Kyriacou, the new Principal of The Cathedral School in Manhattan, was honored as The National Herald’s Educator of the Year.
Conventional wisdom asserts that buying a home is a better financial decision than renting, but average home prices have increased 39% faster than rent prices since 2019, calling that long-held assumption into question.
Price-to-rent ratios in the 50 most populous United States metros show it is actually better to rent than buy in many cities, according to a new study from Clever Real Estate. In fact, it is cheaper to rent in 32 of the 50 most populous metros, based on the price-to-rent ratio.
When taking into account the full cost of homeownership — including principal, interest, taxes, and homeowners insurance — monthly rent is cheaper than monthly mortgage payments in 48 of the 50 most populous cities.
Although affordable markets for home buying still exist, they are few and far between.
Homeownership Isn’t All It’s Cracked Up To Be
Americans aren’t very enthusiastic about renting — almost 60% say it’s a waste of money. Many financial experts point out that, unlike homeowners, renters don’t build equity, get no tax benefits, face yearly rent hikes, and often deal with bad landlords.
However, homeownership isn’t all sunshine and roses. Hidden expenses often surprise Americans as they move into their new homes. In addition to their mortgage, homeowners spend up to $18,000 a year on maintenance and repairs.
Homeownership can be unexpectedly time-consuming, too. The average homeowner spends almost 600 hours each year on maintenance and improvement projects.
Sunken costs and hours lost can translate into a lot of stress. More than one-third of homeowners say they’d be less stressed if they didn’t own a home, and more than one-quarter said they’d consider renting again.
Both buying and renting have advantages and disadvantages, but consumers’ best choice depends on their local market.
Ranking Cities by Price-To-Rent Ratio
Housing experts use the price-to-rent ratio to determine whether buying or renting in certain areas is best. To determine this figure, divide the median home price by the median annual rent.
A price-to-rent ratio of 15 or below means it’s much better to buy, while a ratio of 21 or more means it’s much better to rent. A price-to-rent ratio between 16 and 20 means it’s probably better to rent, but consumers should consider other factors.
Skyrocketing home prices have skewed price-to-rent ratios heavily toward renting. Based on current price-to-rent ratios, homeownership is cheaper than renting in only 18 of the U.S.’s 50 most populous metros.
For a Starter Home, Head to Cleveland
Of all 50 cities studied, Cleveland has the lowest price-to-rent ratio, at only 11. It also has the lowest home prices, with a median value of $187,413. Although rent is also very affordable in Cleveland, local experts say lifestyle factors often tilt the decision in favor of buying.
“Apartments often don’t fit the lifestyle many families are looking for in the Cleveland area,” offers Cleveland-based real estate agent Geoffrey Hoffman. “Renting often makes the most sense only for short-term situations. For example, if someone is relocating on short notice and doesn’t have time to shop for and purchase a home. Home prices have gone up as well, but the costs versus benefits of ownership is typically still seen as more attractive than rental options.”
Cleveland is one of several Rust Belt cities that are better for homebuyers. Pittsburgh is a close second, followed by Chicago, St. Louis, Detroit, Cincinnati, and Indianapolis. The South also offers some of the most affordable homes in the country. New Orleans, Memphis, and Birmingham round out the country’s top 10 buyer cities.
Together, these two regions have 15 of the 18 most affordable cities for buyers; home prices are below the national median of $420,000 in the top 18 cities — excluding Miami and New York City.
Renting Trumps Buying in High-Priced Western Cities
Americans who heed the call to “Go West” should prepare to put homeownership on hold. In many West Coast cities, home prices outpace rent, making renting the more sensible strategy.
San Jose leads the list of best cities for renters. The city has the highest price-to-rent ratio at 37.6 and a median home value of over $1.5 million. San Jose housing costs are so skewed that it’s better to rent, even though the monthly rent payment is $3,331 — the highest in the country. That’s more than three times the lowest rent — $1,333 in Oklahoma City.
“Housing prices in San Jose are very high for a reason,” says San Jose-based agent Julie Wyss. “We are in the heart of Silicon Valley, where young professionals are hired by tech companies and paid huge salaries. Millennials are coming to the Bay Area for work, a fabulous California lifestyle, and some of the best weather in the world. Typically, homebuyers are young, married couples, both with large salaries, therefore, they can afford the high housing prices in San Jose.”
Other cities favorable to renters include San Francisco, Los Angeles, Seattle, Salt Lake City, San Diego, Portland, Denver, and Austin.
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Franklin Schneider | Wealth of Geeks
This article was produced by Media Decision and syndicated by Wealth of Geeks.
NEW YORK – Meropi Kyriacou, the new Principal of The Cathedral School in Manhattan, was honored as The National Herald’s Educator of the Year.
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