By Jennifer Riner, Trulia
It’s one of the most common questions in real estate: should I rent or should I buy? For most aspiring homeowners who plan to stay in the same city for a period, buying is the preferred route. Instead of paying off the landlord’s mortgage, homeowners’ monthly payments are funneled into their own investment that, typically, increases in value over time. The better question is – which can I afford?
You’ve probably heard – at least in recent years – homeowners save thousands compared to renters. According to Trulia, buying is a better deal in every major U.S. metro – at least for those with an average budget who plan to stay in the home for at least seven years. The calculation also assumes 20 percent down upfront on a 30-year fixed mortgage rate and an income tax rate of 25 percent. Last spring, when the average mortgage interest rate was 4.1 percent, buying a home in the U.S. was 33.1 percent cheaper than renting under those same parameters.
Every market’s rent vs. buy cost disparity varies. See how much Orlando homeowners save in the city and three popular suburbs nearby:
The average 30-year fixed interest rate has boosted slightly since spring but remains appealingly low at 4.35 percent. In Orlando, where the median sales price is currently $220,000 and the median rent is $1,600 per month, buying a home is 38 percent cheaper than renting one. In seven years, the average Orlando homeowner spends $80,000 while the average renter spends $130,000. Simply put, owning Orlando condos costs $50,000 less than renting them.
Windermere is a suburb just 12 miles southwest of the city that consistently ranks as one of the safest and family-friendly towns in the state. Because of its reputation, housing prices tend to skew higher than the urban core and broader metro. The median sales price for homes in Windermere is $407,000 while the median rent is $2,150 per month. When averaged out over time with expenses like down payments, insurance and taxes factored in, homeowners spend $140,000 compared to $180,000 spent renting.
Sitting slightly northeast of the city, Winter Park is another suburban area rich in green spaces, cultural attractions and historical charm. The median sales price for Winter Park real estate is $255,000 while the median rent is $1,600 per month. Buying a home in Winter Park is 30 percent cheaper when the total costs of each are averaged out over seven years. During those seven years, Winter Park homeowners spend $91,000 while renters spend $130,000.
Oviedo is located closer to Orlando International Airport, although the driving distance to downtown is less than 20 miles. Yet, due to its proximity to both Little Big Econ State Forest and Lake Jesup, Oviedo is a quiet haven compared to the buzz of the city. With a median sales price of $302,500 and a median rent of $1,675 per month, buying in Oviedo is 21 percent (or $30,000) cheaper than renting. Over a seven-year period, buying a home costs $110,000 compared to $140,000 spent renting.
Not everyone has a budget or finances that perfectly match their neighborhood’s median. To determine how much you could save by buying, first use a home affordability calculator. Once you have a projected target purchase price in hand, use a mortgage calculator to see what your monthly payments might look like with different interest rates and down payment amounts. Compare that to your current rent to learn exactly how much you could potentially save each month through homeownership. If buying your own place is financially feasible, contact Suzi Karr Realty, a Castle & Cooke subsidiary, to launch your Orlando home search.