Mar
09

Buying Chicago Real Estate Cheaper than Renting

March 09, 2014

School is in on renting vs buyingA new report from Trulia shows that buying is cheaper than renting nationally, including in all 100 of the largest metro areas (though not as cheaper as it was last year). Even with buying still 38 percent cheaper than renting overall (and 47 percent cheaper in Chicago in particular,) there are still risks on your investment depending on local conditions in your market. As the market in Chicago is still relatively depressed with its glut of foreclosures, the fact remains that the metro area is seeing steady improvement in the real estate market and is expected to continue to improve.

In addition to home values, mortgage rates can also go up. The rise in mortgage rates is one of the primary factors contributing to why it’s not as much a deal to buy this year as last year (38 percent this year versus 44 percent last), but Trulia asserts that buying will beat renting nationally until mortgage rates climb all the way up to 10.6 percent. That measure differs from place to place, of course, but Chicago is in the middle at about 15 percent (in other words, buying will be cheaper than renting in the Chicago area until mortgage rates hit 15 percent). In Honolulu it becomes better to rent at five percent and in Detroit it will be better to rent until rates hit 33 percent.

If you are considering buying, remember that there are a number of factors that can change the value of your purchase, some of which are in your control. Things like how long you live in the home and whether you itemize your tax deductions are in your control. Other factors, like the prevailing mortgage rate, are known upfront even if you can’t control them. But the big uncertainty is what will happen to home prices after you buy with market appreciation. Despite the zombie foreclosure fear, Trulia expects that even if Chicago returns to the 2006 era of home depreciation, buying a home is still a safe bet and you will save 14 percent over renting (should the costs of renting continue their trend).

To learn more, check out the Rent vs. Buy Report for winter 2014 on Trulia.com!

About The Author

Read All Stories By Mitch Levinson

Mitch Levinson is the author of “Internet Marketing: The Key to Increased New Home Sales” published by BuilderBooks. He is an Internet marketing expert with expertise in search engine optimization, website development, email marketing, social media and CRM consulting services. He is known for creating effective programs that can be tracked through analytics to prove effectiveness and ROI. Mitch is founder and president of MLC New Home Marketing and MLC FlatFee Realty, as well as managing partner of mRELEVANCE, LLC, a Marketing, Communication, Interactive agency with offices in Chicago and Atlanta. He currently leads the Chicago team. A Multi-Million Dollar Sales Producer who earned an MBA in Computer Information Systems and eCommerce, he brings a unique perspective and experience to the field of real estate communications. Mitch combines the two interests in order to help home builders and developers gain a competitive advantage through the Internet and technology. When he isn’t behind a computer, he enjoys participating in sports and coaching his kids’ teams. Mitch resides in Arlington Heights, Ill., a northwest suburb of Chicago, with his family, which includes two rambunctious labs. Visit my Google+ profile.

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