Doing Math On Homebuying – Is it a good time to stop renting and buy?

San Diego County Rental Stats

Sep-12 Sep-13 % change

Average monthly rental rate $1,377 -$1,475 7.1%

Average square footage 870- 873   0.3%

Average price per $1.58 –  $1.69    7.0%

Vacancy rate 4.50%-  4.61%        2.4%

Source: MarketPointe Realty Advisors

Pros of renting:

• Greater mobility. Selling or buying a home has transaction cost and can take time.

• You can call the landlord for repairs

• There’s no resale risk. While home prices have been rising in San Diego County, there’s no guarantee that the value will increase over time.

Cons of renting:

• The landlord can kick you out if, for example, he or she decides to sell the place

• No equity is built up: “Renting is throwing money away,” said Linda Lee, president of San Diego Association of Realtors.

• You can’t paint or remodel without the owner’s permission

Rates near historic lows

The monthly average 30-year, fixed mortgage rate rose nearly one percentage point from May to August to 4.46 percent, according to Freddie Mac, the government-controlled mortgage buyer. However, mortgage rates are still near historic lows. Throughout the 1980s, for example, they ranged from 9 percent to 18 percent.

For the San Diego metro area, mortgage rates would have to climb to 7.3 percent for renting to be cheaper than buying, according to a Trulia report released Thursday. Trulia calls this the mortgage-rate tipping point. The last time 30-year fixed mortgage rates were that high was about 12 years ago, according to Freddie Mac.

By comparison, the mortgage rate tipping point is 7 percent for Orange County, 5.7 percent for the San Francisco metro area and 5.2 percent for the San Jose metro area.

Read more at: http://web.utsandiego.com/news/2013/sep/21/tp-doing-math-on-homebuying/

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