After six years of renting in San Francisco, Kate Wilusz jumped at the chance to swap her tiny apartment for a roomy four-bedroom Victorian home. But she is paying a mortgage instead of rent—and coming out even.
"I could not be more thrilled," said Wilusz, a financial planner who recently closed on the dream house with her husband, Charley.
In some U.S. markets, prices appear to have fallen enough to make buying cheaper than renting. Mix that with mortgage rates that are near record lows and renters who want to become buyers are rejoicing.
"The U.S. government is helping bail out those who bought at the top, but I got my own personal stimulus package through falling home prices and low interest rates on mortgages," said Wilusz, who works at Ameriprise Financial.
Wilusz said instinct told her it was time to buy, and her new home costs her as much to own as it would have to rent.
"Everyone was saying home prices in San Francisco would never go down, but any time someone says something will never happen, it usually happens and it is time to be a contrarian," she said.
San Francisco, one of the metropolitan areas covered in the widely watched Standard & Poor's S&P/Case-Shiller Home Price Indices, has shown significant home price depreciation. Home prices fell 3.8 percent in December from November.
San Francisco was also one of the worst-performing cities in terms of year-over-year declines in December, with home prices dropping an average 31.2 percent. The silver lining in these clouds over California's housing market is clear: Lower prices are luring buyers.
Home sales in California rose 42.5 percent in February from a year earlier as the median home price slid 39.9 percent, driven by sales of foreclosed properties, according to a MDA DataQuick report last week.
The report said 29,225 new and resale houses and condominiums were sold in California last month, down 0.8 percent from January. The median price for a home in the most populous U.S. state was unchanged from January at $373,000.
Owning Costs Less
"You can now own a home in so many areas of the country for less than it costs to rent," said Mollie Carmichael, senior vice president at John Burns Real Estate Consulting in Irvine, California.
Out of the 76 metropolitan area markets across the United States tracked by the company, a whopping 50 percent show that a person can buy a house for less than renting when considering the after-tax cost of homeownership, she said.