It's better to buy than to rent in Dallas these days according to a new study from real estate site Zillow, which found that paying a monthly mortgage is more than twice as affordable as paying rent. What's more, it's now more affordable to buy a home than it was 15 years ago, even for young people putting down less money.
Zillow found that a mortgage took up 11.3 percent of a Dallasite's monthly income; for first-time homebuyers, it's a little higher, at 14.5 percent, when factoring in potential additional costs like PMI. But both were considerably less than the 27.7 percent of monthly income that renters devote to housing, based on third-quarter income and home value data.
Nationally, a buyer making the nation's median income and purchasing a typical home spends 15.3 percent of his income on a monthly house payment, down from the historical norm of 22.1 percent from pre-bubble 1985-1999. For first-time buyers, the average is 17.4 percent. U.S. renters spend an average 29.9 percent of their monthly incomes on rent, up from a historical 24.9 percent.
Zillow chief economist Dr. Stan Humphries suggests that high rent is the biggest obstacle in making the transition to home ownership.
"It's very difficult to come up with a down payment when so much of your monthly paycheck — especially on an entry-level salary — is going to your landlord instead of into your savings," he said in a statement. "Buying conditions are getting better every day, and in time the allure of fixed housing payments and building wealth through home equity will draw more buyers out of rentals and into homeownership."
Humphries predicts that Millennials (23- to 34-year-olds) will be the largest group of homebuyers in 2015 — surpassing Generation X — as more of them, who have put off getting married and having kids until later in their lives, look to settle down.