The latest report by national brokerage Redfin indicates that, with today's mortgage rates, it is generally more affordable to rent a home than to buy one.
That may come as no surprise, however, the report revealed there are four cities nationally that buck that trend - where it is actually cheaper to buy a home than to rent one.
And one of those cities is in Ohio.
Which city in Ohio is it?
The report indicates that, due to the long-term stability of home prices in the Cleveland area, it is in fact more affordable to buy a home there than rent one.
Assuming a 5% down payment and a 6.5% mortgage rate, the median monthly mortgage cost would be $1,730 while the median rent in the city is $1,800 per month. That's a difference of $70/month.
In fact, 56.8% of homes in the city are more affordable to buy than to rent.
Unlike most other cities, Cleveland's housing prices have not seen significant increases in recent years. This can be problematic, as Redfin says:
When house hunters can’t build a lot of equity, they have less of an incentive to pay a premium to own.
However, while Clevelanders miss out on housing booms, it also means not suffering as much during a housing bust, which is taking place in many parts of the country.
Home buyers in Miami and Phoenix, cities that have highly inflated housing costs, may turn around and see they have actually lost money in a home they purchased during the boom years.
Cincinnati is faring differently
Housing prices have been rising faster in Cincinnati than in Cleveland, so in many cases, renting is more affordable than buying. Only 39.6% of places in the city would be more affordable to buy than to rent.
The median monthly mortgage payment in Cincinnati is $2,030 while the median rent is $1,910 per month. That's a difference of $120 per month or a 6.2% premium on home ownership.
What about Columbus?
Columbus has an even higher buying premium than Cincinnati.
The median monthly mortgage payment in Columbus is $2,327 while the median rent is $2,061 per month. That's a difference of $266 per month or a 12.9% premium on home ownership.
In Columbus, only 28.3% of homes would be more affordable to buy than to rent.
The hidden costs of home ownership
Of course, buying a home requires a down payment, which hasn't been factored into these costs. However, it's interesting for Cleveland locals to note that if it's possible to do so, long-term homeownership may in fact be more cost-effective than renting.
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