The February 2011 CAR Trends Report has been posted to the Research Data section on the Marketing page of SAVI.
In it, CAR analyzes the merits of renting versus buying, and shows that current California housing market conditions, coupled with lower home prices and attractive mortgage rates for qualified buyers, make a strong and compelling case for homeownership. Here is a summary of their analysis:
HOMEBUYER – The monthly housing costs associated with buying a median-priced home of $301,430 is $1,590.
RENTER – In comparison, the median rent on a three bedroom, two bath apartment with renter’s insurance in California is $1,810.
CONCLUSION – Buying a home would save the homeowner $220 per month, and over $2,600 a year, when compared to renting.
HOMEBUYER – Existing tax laws allow homeowners to itemize and deduct the mortgage interest and property taxes from their taxable income. The tax implications for a household earning $63,430 a year that purchases a home with a 20% down payment and finances the mortgage at the current rate of 4.62% will receive a tax deduction of over $14,000 in the first year of ownership.
RENTER – The renter household earning $63,430 a year will most likely utilize the IRS Standard deduction of $11,400, $2,600 less than their homeowner counterparts.
CONCLUSION – The homebuyer reduces their total tax liability by $400 compared to the renter in the first year of ownership. Accounting for the out-of-pocket savings as well as the tax savings, the homebuyer saves over $3,000 in their first year of ownership.
To access the full report, click here.