Trulia’s “Rent vs. Buy” index once again credits Atlanta as a healthy city for buying in lieu of renting.
Dollar for dollar, it is 52% cheaper to own and maintain a residential property than it is to lease a similar residential property.
Phenomenally, other leading RENT cities like Chicago and NYC have become cheaper BUY cities – it is 22% cheaper to own vs. rent in NYC, and 47% cheaper to buy in Chicago. Those numbers have changed a lot in the past few years.
Atlanta’s numbers have always screamed BUY! That’s why so many REITS, hedge funds and corporate investors swallowed up most of the stagnant, dirt cheap, distressed inventory in Georgia during 2012 and 2013…
These statistics have been consistent in Atlanta for decades.
The entire city by city report, from Trulia’s Chief Economist Jed Kolko, can be found at this link.
Trulia is, in my opinion, the best consumer website on the internet – the kind of work that they do in this index is one of the reasons why I state that with confidence. Here’s an explanation for the arithmetic in the index:
“This report, our map, and our calculator are all powered by the same math, which includes these five steps:
- Calculate the average rent and for-sale price for an identical set of properties. For this report we looked at all the homes listed on Trulia for sale and for rent from December 2013 through January 2014. We estimate prices and rents for similar homes in similar neighborhoods in order to get a direct apples-to-apples comparison. We are NOT just comparing the average rent and price of homes on the market, which would be misleading since rental and for-sale properties are very different: most importantly, for-sale homes are roughly 50% bigger, on average, than rentals.
- Calculate the initial total monthly costs of owning and renting, including the mortgage payment and rent, as well as maintenance, insurance, and taxes.
- Calculate the future total monthly costs of owning and renting, taking into account price and rent appreciation, as well as inflation.
- Factor in one-time costs and proceeds, like closing costs, down payment, sales proceeds, and security deposits.
- Calculate the net present value to account for opportunity cost of money.
To compare the costs of owning and renting, we assume buyers get a 4.5% mortgage rate on a 30-year fixed-rate loan with 20% down; itemize their federal tax deductions and are in the 25% tax bracket; and will stay in their home for seven years. Under these assumptions, buying is 38% cheaper than renting nationwide, taking into account all of the costs and proceeds from buying or renting over the entire seven-year period. The full methodology is available here.”
If you intend to buy in Atlanta, then Atlanta sellers crave you right now – arguably, December 2014 reveals many neighborhoods where supply exceeds demand. Neighborhoods where 6 months of standing inventory or even more, is now the norm.
So, since Atlanta is 52% cheaper on average than renting in Atlanta, play with this calculator and do your own math. Go to LeeTaylor.re when you are ready to employ Lee Taylor, a 15 year veteran, Decatur and Intown Atlanta Realtor!