Buying beats renting in 35pc of largest us cities

The online marketplace’s latest report factors in transaction costs and taxes and shows that despite rising mortgage rates, renting a home rather than buying is significantly more expensive.

Indeed, in the last 12 months, a 30-year fixed-rate mortgage climbed from 3.75 per cent to 4.8 per cent, taking the cost of purchasing a home to 35 per cent below renting compared to 45 per cent last year.

Certain cities are more affordable for buyers than others. In Detroit, for example, buying a home is now 65 per cent cheaper than renting, while in San Francisco and San Jose it is 10 per cheaper – a big shift from 31 per cent and 28 per cent cheaper this time last year.

“While it’s hard to believe after the recent spike in mortgage rates, it’s still more than one-third cheaper to buy a home than to rent,” commented Jed Kolko, Trulia’s Chief Economist. “Recent mortgage rate and home price increases have made buying significantly more expensive than last year, but not enough to tip the math in favor of renting.  This is because rates remain well below historical norms, and prices are still slightly undervalued, too.”

If rates keep rising over 5 per cent and current rents and prices remain flat, San Jose will become the first housing market to tip in favour of renting, notes the report.