Comparing the cost of buying vs. renting a home in Detroit
(CBS DETROIT) - It's become a question on the minds of a lot of people around the country: do I buy or rent a home, and what's more cost-effective?
According to an analysis from Bankrate, the better option is to rent for the majority of people.
Let's look at some of the numbers illustrating this point.
Across the country, the median price of a home right now is almost $413,000. The mortgage on that amount is about $2,703/month, and the rent price was $1,979. This means the buy-to-rent ratio was 37%.
In Metro Detroit, the news is a little more encouraging.
The average mortgage payment was $1,423/month, and the rent was $1,395/month, so this puts the buy-to-rent ratio at 2%.
In comparison, let's look at San Francisco, which comes in as the most expensive.
The mortgage on average was $8,539/month, and the rent was $3,255/month. The buy-to-rent ratio here was 180.7%.
Detroit had the smallest gap between renting and buying, while San Francisco had the largest gap.
CBS News Detroit spoke to Bankrate about why the data doesn't take into account the cost of homes.
"That is an issue where homes maybe aren't as high quality or don't have the things that you would typically want in a home, and that's why they are priced so much lower," said Alex Gailey of Bankrate. "But a typical family in Detroit that is making, I would say, average or median income could probably still have an easier time affording a typical home in Detroit than if you were to look at a typical family with a typical income in, let's say, San Francisco, for example."
Bankrate says that research for your local market is critical for prospective homeowners.
Housing experts say don't rush into buying a home; figure out exactly where you see yourself living and for how long; and consider how you are building long-term wealth.