Buying Less Expensive than Renting in Salt Lake City

According to Trulia‘s most recent Rent vs. Buy Index, it is now cheaper to buy a home in Salt Lake City than rent. Because the price-to-rent ratio is 9.9, Trulia indicated that purchasing is the smarter deal if the buyer plans to live in the home for at least 5 years. In general, scores of less than 15 indicate good times to buy, scores in between 15 and 20 are neutral, and renting often makes more sense in areas with ratios of 20 or higher.

The reasons for this are twofold: first, despite rising home values, mortgage rates have stayed incredibly low. This means affordability is very high (more on this in a post later this week).

Second, the demand for apartments is high: The vacancy rate was at 4.4%, the lowest since 2007. Vice President of Reis research and economics explains that once vacancy rates fall below 5%, “rents tend to spike as landlords perceive that tight market conditions allow for greater pricing power.” This has resulted in average effective rents going up, $725 in the first quarter of this year compared to $706 during the first quarter of 2011.

This trend is forecasted to continue: for the year as a whole, Reis expects a 3.9% vacancy rate and a $748 average rent per month as a result. These increasing prices mean that buying a home may make even more sense in the future.

For a list of inexpensive homes for sale in Salt Lake City, visit our website. For an honest evaluation about whether or not home purchasing makes more sense for you, please call us at 801-859-7509.