Philly’s real estate market has experienced a record-breaking year with home prices hitting an all-time high since the Great Recession, but buying is still a better deal than renting, according to a new analysis.
Trulia’s latest Rent vs. Buy report finds that it’s 50.8 percent cheaper to buy than rent in Philadelphia. It’s ranked 9th in U.S. cities where buying a house beats renting an apartment.
In fact, it was just one of two Northeast cities that made the cut. The rest of the U.S. metros where it’s cheaper to buy are located in the south.
In the U.S. overall, buying is still a better bet. For folks who move every seven years and can put 20 percent down, it’s 37.7 percent cheaper to buy than rent.
That $1,300 monthly rent in Philly may sound a bit off to some renters. But to come up with that number, Trulia included monthly rent, renter’s insurance, and one-time costs (i.e. security deposits) in their calculation. They also accounted for general inflation, which they suggest averages about 2 percent a year.
It should also be noted that Trulia calculated the median home values and rents using March 2016 numbers. Since then, Philly’s home values hit an all-time high in the second quarter, with the median price rising to $145,000.
So what’s this all mean? The researchers write:
Homebuyers should also be more concerned about prices outpacing rents than any possible rate hike by the end of the year. This is because the tipping point for rates is proportionally much higher than the tipping point for prices. In other words, rates would have to go up much more than prices for the costs of buying a home to be parity with the cost of renting. [...] Still, we think either scenario – aggressive price or rate increases – is unlikely to play out anytime soon.
So you can still get your money’s worth around here by buying, even with this city’s hot real estate market. But keep an eye on those rising house prices.
- Rent vs. Buy [Trulia]
- Report: Philly is officially a seller’s market with prices at an all-time high [Curbed Philly]