Thinking of buying a home? Consider this: The gap between monthly rents and mortgage payments is at its lowest level in almost 20 years.
In some markets, the difference can be less than $100, according to a national study conducted for The Associated Press by Marcus & Millichap Real Estate Investment Services.
The study, part of a week-long look at homeownership by the AP, found years of falling home prices and low interest rates have created the ultimate buyer’s market. But while buying a home is more affordable, it isn’t necessarily easier.
Tougher lending standards have made it harder to qualify for a home loan, and unemployment is at 9.7 percent. Tax incentives for homebuyers will expire April 30, and interest rates are expected to increase this year.
“Statistically, it’s a great time to buy,” said Hessam Nadji, managing director of Marcus & Millichap. “Psychologically, the consumer doesn’t feel like it’s a great time to buy.”
The analysis of 45 metro areas found the difference between the monthly mortgage payment on a median-priced home and the median rent is down to $256. The last time that gap was anywhere near that small was in 1993 when it fell to $264, according to the study.
Marcus & Millichap used median prices for the last three months of 2009 and calculated mortgage payments by assuming a 10 percent down payment and a 30-year fixed loan at 5.07 percent, among other factors. It also assumed borrowers.
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