According to reports from Hotpads.com, a rental listing service that also generates market data on rental statistics, rental prices rose to a hefty 14.4% in 2012. As rental prices are expected to rise, homeownership will actually prove to be more cost effective than renting. With these inflated rental prices, more people are opting for homeownership.

According to Hotpads:

Even with rental prices soaring, and home prices actually being cheaper in the long run, the easiest way to figure out if you’re ready to become a homeowner is using the rent ratio. To figure out your rent ratio, you take the house’s purchase price and then divide it by your yearly rental costs. According to the New York Times “the number 20 provides a useful rule of thumb. When you do the math, you discover that a ratio above 20 means you should at least consider renting, especially if you may move again in the next five years or so. When the ratio is well below 20, the case for buying becomes a lot stronger.”

Only you would know if you’re ready for homeownership. Debt, life changes such as marriage, divorce or death may throw a monkey wrench into your plans, so renting may be a short-term option just so you can recover from those unexpected events.

Clutchettes, have you made the jump into the housing market? If you’re renting, do you plan on buying soon?

 

Tags: ,
Like Us On Facebook Follow Us On Twitter
  • jamesfrmphilly

    own!

  • Lynette

    We also have to remember that scores of people/families have lost their homes to foreclosures within the last 4-5 years, which is what is driving the rental market today. I think you also should point out that home ownership is not for everyone. As someone stated up-thread you also have to factor in emergency repairs. Just this year alone, I’ve paid for expensive repairs to my HVAC and replaced at least six windows–that stuff ain’t cheap. Also, lenders have become a lot more strict about underwriting home loans and if you don’t have the cash reserves and stellar credit it’s not going to be all that easy to get a loan.

    I was hesitant about looking at employment opportunities outside of my state, b/c the job market is so tough where I am and felt that I was tied to my home. It’s good to know that I may be able to rent it out w/out too much difficulty. And that’s another thing, if you think you might be moving w/in the next couple of years, it may be better to rent.

  • binks

    Right now, I’ am living with my parents until I finish grad school and find a stable job so I don’t have to worry about renting, at first I thought renting was my ideal but now looking at all the apartments I possibly want to live at in certain cities I’ am noticing that they are way to ridiculously expensive for rent. Hell for what I will pay on rent it would be a mortgage anyway. So that is why I’ am stashing and saving so I can buy…hopefully a cool little loft once I’ am settled and done. And if I ever get married I could use it as rental property. Maybe I’ am viewing owing more closely is because my family never had a “house” we always rented and moved, rented and moved, etc. so I want to end the cycle and plant roots.

    • Jaslene

      I really like your story. It great to know that you are interested in home ownership.

  • KT

    I want to buy a home; however, I’m currently in the military. It’s so hard to buy a home somewhere if you’ll only be there 2 to 4 years. Yes, I could rent it out after leaving, but I’d have to have a property manager or travel back to the area periodically. Either way…it’s looking pretty rough for me. I guess I’ll keep renting for a few more years.

  • Skye

    Definitely wanting to become a homeowner. I’m in that building block stage in my life where I’m paying off debt, trying to restore and build my credit and also save $$. Slowly but surely I will get there. I too grew up in a household where we rented and moved and rented again. So this is for my children so I may have a foundation for our family. In 1-2 years I’ll be proud to call myself a homeowner!