• Your Napa Riverfront REALTOR®
  • 
  • 
  • 
  • (707) 548-2545
  • donald@donaldburesh.com

Donald Buresh

Napa Waterfront Homes for Sale

  • About Me
  • My Services
    • Napa Yacht Club
  • Blog
  • Contact Me

The Finances of Renting vs. Buying

by Donald Leave a Comment

Trulia reported this week that homeownership is 45% cheaper than renting in the United States. Jed Kolko, Trulia’s Chief Economist explained:

“Homeownership is cheaper than renting in all of the 100 largest metros, by a wide margin. Despite the recent price rebound, rents continue to rise faster than prices, and mortgage rates are near record lows.

Homeownership makes the most financial sense for people whose strong credit scores let them snag the lowest mortgage rate and who get the biggest benefit from deducting mortgage interest and property taxes from their income taxes.”

(Trulia’s methodology is explained here.)

This news did not come as a surprise to us as we have reported that today’s rental market definitely favors the landlord. Below is a graph of how rental prices have increased recently and where they are projected to go over the next few years based on a report from Marcus & Millichap.

It cost more to rent than own right now. And you don’t get any of your rent back in the future. History shows us, in the long term, you can build equity in a home. Dr. Ken Johnson earlier this year explained in a post on this blog:

“It appears that homeownership creates extra wealth mainly through its ability to force owners to save rather than through property appreciation. Thus, homeownership appears to be a self-imposed savings plan, which through time leads to greater wealth accumulation as compared to comparable renters. In short, buying a home makes Americans save.”

The Joint Center for Housing Studies at Harvard University released a study last year titled America’s Rental Housing: Meeting Challenges, Building on Opportunities. In the study, they actually quantified the difference in family wealth between renters and homeowners:

“[R]enters have only a fraction of the net wealth of owners. Near the peak of the housing bubble in 2007, the median net wealth of homeowners was $234,600—about 46 times the $5,100 median for renters. Even if homeowner wealth fell back to 1995 levels, it would still be 27.5 times the median for renters.”

What Does This All Mean?

We believe David Shulman, senior economist with the UCLA Ziman Center for Real Estate said it best:

“The American Dream of homeownership may be comatose, but it is not dead, and the wake-up call will come in the form of higher rents.”

by The KCM Crew on September 14, 2012

Filed Under: Real Estate Blog

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Rave Reviews

Donald goes out of his way for his customers – it’s just his nature. He never says “no” and he has such a positive attitude. Doing business with Donald is always a pleasure.
Cyndi Jeanty, Co-Owner, Bistro Jeanty
I have known Donald for many years. We both have served on civic groups together and I have enjoyed his upbeat personality. He is a true professional that takes his business and his client relations very seriously – Donald is known for taking care of his clients and being a man of action.
Pam Rubio, Branch Manager, Wells Fargo Bank
I am a repeat customer of Donald Buresh. He is someone that I would recommend to my family and friends, not just because he is an outstanding business person, but because of his attention to detail and his high quality of work – both outstanding.
Bob Nugent, Chairman & CEO, Jack in the Box Inc.
I have done business with Donald for over five years. He has a great eye for detail which is something I greatly appreciate. I admire Donald’s entrepreneurial spirit – he’s a man of action, he makes sure you’re happy, and he invests himself in his business.
Jon Lail, Executive Principal, Lail Design Group

Email Me

For your full-service realty needs, specializing in Napa and St. Helena properties, Riverfront homes, and Napa Valley luxury real estate, Donald has the ability to find the right property with you in mind. Now accepting new clients, Donald looks forward to working with you now and in the future.

Office Locations

Coldwell Banker Brokers of the Valley has a long successful history serving real estate buyers and sellers throughout Napa County. The company was formed in 1994, bringing together three long-time Napa firms, the oldest of which had begun serving Napa homeowners in 1978.

CB_logo
Napa Office
1775 Lincoln Avenue
Napa, CA 94558

See Location

St. Helena Office
1289 Main Street
St Helena, CA 94574

See Location

  • About Me
  • My Services
  • Napa Yacht Club
  • Blog
  • Terms of Use / Privacy Policy

© Copyright 2022 Donald Buresh · DRE# 01870799 · All Rights Reserved ·