Those debating whether to buy a home or rent would actually be better off financially to purchase, according to new research from Deutsche Bank. Their data, as reported by the Huffington Post, shows that at the end of 2011, renting cost approximately 15 percent more than buying.
In the past, renting has consistently been about 10 percent cheaper than buying. In the housing market’s current state, however — with home prices falling and rental rates going up — rental space is at a premium. In fact, vacancies are currently at their lowest level in 10 years.
Because of the high demand and low supply, rents are skyrocketing nationwide. Calculations by the National Low Income Housing Coalition showed that an individual in a minimum-wage job earning $14.15 per hour would need to earn 29 percent more to cover rent and still have money leftover.
The reality is that even with such adjustments, keeping up with the rent might be beyond the means of many. The same report from NLIHC indicates that even with a 60-hour work week, minimum-wage earners could not afford the average national rent. Covering that cost would be even more difficult in New York, California and other parts of the Northeast, where minimum-wage workers would have to log more than 100 hours per week to keep up with rent.
While the Deutsche Bank study says buying is currently cheaper, those conditions are still far from ideal. As part of the ongoing financial crisis, many banks have adopted more strict lending standards. In addition, inflation-adjusted wages have been falling steadily
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