PMC Mortgage Lender's Blog

“Homeownership is getting more affordable thanks to falling home prices and rising rents,” reports Meg Hadley, US News Personal Finance Writer.

In nearly 4 out of 5 major U.S. cities, it's now cheaper to buy a home than to rent. “That's up from 72 percent of cities last quarter, based on the Rent vs. Buy Index released by online real estate resource Trulia,” stated Hadley.

More Americans signed contracts to buy homes in March, according to the National Association of Realtors' pending homes sales index — up 5.1 percent — a signal that could mean more house hunters are snapping up bargains.

Heather Fernandez, Vice President of Marketing at Trulia said “We're starting to see consumer confidence shift and people are more interested in home buying,” especially when they compare home ownership with rising rental rates. “Homeownership is becoming more affordable across the U.S."

Cities in Texas, Arizona, and Colorado had only slight gains on average while Florida lost ground, but all of the sampled metro areas in these states were rated much less expensive to buy than rent.

The top cities with the greatest shift towards buying in the Rent vs. Buy Index, Q1 to Q2, are Fresno, Omaha, San Jose, Cleveland, Detroit, Minneapolis and Albuquerque.

Hadley says experts emphasize “the real estate market is local.” The rent vs. buy decision in coastal cities – Los Angeles, Seattle, Boston, San Francisco, Portland and Oakland – depends less on home affordability and more on personal finances.

Only in New York, Fort Worth and Kansas City was renting a less costly option than buying.

“Aspiring homeowners should focus their energies on locking down a low mortgage rate sooner than later,” warns Ken Shuman, Trulia’s head of Communications, because, “today’s low interest rates will likely rise thanks to inflation and spikes in the Fed rates.”

Experts remain confident that improving employment and economic data will breathe life into the housing market this spring and summer.

Trulia calculated the Q2 2011 price-to-rent ratios for the 50 largest U.S. cities using the median list price compared with the median rent on two-bedroom apartments, condominiums and townhomes listed on Trulia.com as of April 1, 2011.