It still costs slightly less to buy a two-bedroom home in Chicago than to rent one, as demand for apartments continues to push rental rates upward, says Trulia in its Q1 2011 Rent vs. Buy Index.
Chicago is one of 36 metro areas where renting beats buying, although it’s closer to the tipping point that most cities. In another 10 cities, it’s cheaper to rent, but may still make financial sense to buy, and in four cities — San Francisco, Kansas City, Seattle, and New York — renting is far and away the less expensive option.
“Although owning a home is relatively more affordable in most cities, market conditions have caused an interesting demographic swap between traditional renters and buyers,” says Trulia Consumer Educator Tara-Nicholle Nelson in an accompanying press release. “For example, lifelong renters are seizing the opportunity to become homeowners while affordability is high. At the same time, a growing number of long-time homeowners are finding themselves tenants – some by choice and others by necessity.”
For buying, Trulia considers the total costs of homeownership, including mortgage principal and interest, property taxes, hazard insurance, closing costs, HOA dues, private mortgage insurance, as well as the tax advantages of homeownership, including mortgage interest, property tax, and closing cost deductions. For renting, Trulia calculates the costs of rent and renter’s insurance.