A great question that we often hear. RealEstateGuy team felt it worth consideration and a blog post.
This calculation does NOT consider the Tax implications of home ownership, and the appreciation aspects, both of which have traditionally made home ownership a no brainer. This exercise hangs on the NOW aspects, dollar in the pocket.
This exercise does take in the face that rental prices are rising, and interest rates are historically low.
I found an actual home listed for rent on Craigslist. Rent does not seem unrepresentative of the West Madison area/size at $2000 a month. see the CL listing below.
Now the home had been for sale on the market for 6 months at $350k, Let's calculate a mortgage with a 20% down, That would be $280,000 and the interest rate 4.25 on a 30 year.
payment $1377, plus taxes and insurance $600. that is $1977. Cheaper? yes! significant? No!
However, let's look at the home, The assessment is $311k. The home did not sell because it was high. I'd suggest fair market more around $300,000. This would be the price that a similar home (not necessarily this one) would actually sell for.
Repeat the above calculation on a $240,000 loan = $1180, plus 600 taxes & Insurance = $1780.
This is a great example, though not statistical proof, that home ownership is indeed a way to go.
Read this great article.
Is now a good time to buy a home?
Look for homes for sale
RealEstateGuy has been a full time, full service Realtor since 1993. He is dedicated to helping people achieve their Real Estate Goals and dreams. In order to provide more specialized service, he created a team of hand picked specialists. Guy believes in constantly learning more, so regularly attends national seminars and trainings. Guy has been a top producer, leader in his office, a president of the Wisconsin chapter of CRS, and has spoken at the State Realtor Conventions.
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