Rent vs. Buying Great news for home sales. First,  look at the graph on the right.
What this says is the gap between the cost of owning a home and renting has returned to normal.
When home prices ran up from 2004-2007, it became more expensive to buy a home vs. renting , on a month -to month basis. What the graph shows is the gap is back to the normal, with a mortgage payment running 25% more than rent.
This is OK, because you also have tax deductibility of mortgage interest plus long term home appreciation plus quality of life which
make up more than this 25%. It's just that for a few years, some first time buyers just couldn't swing the monthly payment when the gap shot up to over 50% higher.
Now for the cool interactive graphic- click on the link below and you can play with all these numbers and watch the graph change to show a potential homebuyer the advantage of buying. based on where home prices are now, I plugged in an assumed appreciation of 5%, a mortgage rate of 5% with a down payment of 3.5% (FHA) and a tax rate of 1.16%. Put in your own numbers for house price and rent costs.
The chart is actually more powerful than you think, you can go to the upper right and set up a bunch of parameters in the 'Advanced Settings" to allow for all kinds of differences.
With prices and interest rates low, plus the $8,000 tax credit for first time buyers, it's a great time to buy.
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