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Buying a Home 52 Percent Cheaper than Renting in Worcester

Wednesday, September 19, 2012

 

Area residents could cut costs by more than half if they opt for buying a home rather than renting in the Worcester area, according to new data compiled by Trulia.

Trulia's economists examined all the homes for sale and for rent in the country's 100 largest metro areas listed in its database during the months of June, July and August this year.

In all 100 markets, buying turned out cheaper than renting over a seven-year period by a wide margin.

How Worcester Compares Around the State

The monthly cost of renting in Worcester, including renters' insurance and security deposits, was estimated at $1,898.

The monthly cost of homeownership came in at just $908 after taking into account related costs such as insurance, maintenance and taxes, as well as tax deductions for mortgage interest and predicted proceeds from selling the home after a period of seven years.

Of the five Massachusetts metro areas included in the survey, Worcester tied Peabody for the top spot on the list, with each city boasting 52 percent lower in potential savings from buying over renting.

Springfield was next in line with estimated savings of 47 percent for those who opt to buy rather than rent, and Middlesex County and Boston rounded out the list with 45 percent and 41 percent respectively.

Realtors Weigh In

"I would say that there couldn't be a better time to buy right now," said Diane DeCiccio, president of the Worcester Regional Association of Realtors.

"Although rentals have been a hot market in the recent past, now that the rates are so affordable for people to actually get a mortgage for less than what they would rent typically."

In Central Massachusetts, home values have been stabilizing and sales have increased on a month-to-month basis this summer, possibly indicating an upward trend.

According to Trulia, asking prices have risen nationally by 2.3 percent since August of last year. Rents, however, have increased by 4.7 percent.

At the same time, mortgage rates have dropped, and after the recent Federal Reserve announcement, they are unlikely to increase anytime soon.

"Definitely if you can buy at these rates, now's the time," DeCiccio said.

"Renting you don't gain any equity in your property. You're just paying your mortgage to your landlord."

Renting to Buy, Buying to Rent

While home sales are up, Seth Welcom, a broker at Nextage Welcom Realty in Worcester who handles both sale and rental listings, said the rental market is doing well, too.

"This time of year you see a lot of students coming into the area that are renting, but we've also seen a lot of young professionals that are out looking for a rental," he said.

Homes priced in the $100,000s and $200,000s have been clearing at a good pace, said Welcom, though higher-priced homes are sitting around a bit longer.

According to Welcom, young couples and young individuals account for many of those purchases, while a few are homeowners looking to downsize.

"We have a number of investors that are looking to buy and to rent out," he said, "which is great because it gets some of the inventory out of the market."

But the monetary benefits of buying a home, such as tax deductions for mortgage interest payments or rents generated by leasing the property out, are only one side of the appeal, said Welcom.

"In the end, there's nothing like the pride of homeownership." 

 

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