Mortgage vs. rent
In the Baltimore metro area, a cheaper-than-typical house -- 75 percent of the median price -- will run you about $1,800 a month if you have a mortgage with a 7 percent interest rate. But rent is just a shade over $1,000.
So says a study released yesterday by the Center for Economic and Policy Research and the National Low Income Housing Coalition, which suggests that this difference, and the even starker gaps in markets like New York and San Francisco, is a problem for stretched homeowners.
From the press release:
According to the report, which analyzed data from the Census Bureau's American Community Survey (ACS), the most inflated markets currently see monthly homeownership costs outpacing rental costs by as much as 300 percent. ...
"This could mean that families may have to forgo health insurance or quality child care as they struggle to make their mortgage payments," said Dean Baker, Co-Director of CEPR and an author of the study. "Furthermore, since prices are still falling in these markets, many homeowners won't ever accrue any equity."
The study projects an equity loss of more than $30,000 in the Baltimore area after four years. It puts the figure at $100,00-plus in some markets.