Buy or rent? An exhaustive Trulia study of the nation's 100 largest metropolitan areas finds that in every single one, it saves money to buy in the long run.

By Peter Ricci

A new Trulia study of the nation’s 100 largest metropolitan markets has come to a staggering conclusions – owning is cheaper than renting in every major metro market in the U.S. by 45 percent, or, $771 a month. For Miami, the conclusions were even better, with savings at 48 percent, or $971 a month.

Trulia Study – Owning Clearly the Better Deal

The Trulia study followed a simple methodology to arrive at its conclusions. It assumed that a prospective homebuyer secures a mortgage at 3.5 percent (which has been the median for a 30-year FRM in recent months), properly itemizes their federal tax deductions, are within the 25 percent tax bracket, and, most importantly, plan to stay in the home for seven years, the average time a homeowner stays in a residence before moving. Using those parameters, Trulia found that by the time those seven years transpire, buying is undeniably a better deal than renting.

Benefits of Homeownership…For Some

However, before you run out and start finding new prospective homebuyers on every street corner, the Trulia study does point out some necessary nuances to their findings, among them:

• That cushy 3.5 percent rate will only be for those with the best credit scores, and obviously, a higher interest rate will cut in to those savings.
• If homeowners do not itemize their tax returns, and do not subtract their mortgage interest and property tax payments from their pre-tax income, that can also reduce savings.
• And, all of Trulia study’s numbers are tightly linked to that seven-year mark; selling a home anytime sooner than that will also make the costs higher.

Agents will also have to remember that buying is still out of reach for many consumers in the post-boom economy for one main reason – the downpayment. Even where the savings are huge, like in Chicago, it can still take years to save for a 20 percent downpayment, and the job market is still a bit tight. So as Trulia’s Chief Economist Jed Kolko cautioned, “Buying may beat renting in every major metro by a wide margin, saving consumers thousands of dollars a year, but buying still remains out of reach for many would-be homeowners.”