Due to lower home prices, lower mortgage rates and federal tax incentives, renters are now realizing they could be home owners for about the same or just a little more money. According to the Associated Press the gap between the monthly mortgage payment on a median-priced home and the median rent has fallen from $777 a month to just $221 in just the past three years. In some metro areas, including Cleveland, Atlanta, Indianapolis and St. Louis, the gap was less than $100 a month. And home prices are expected to fall faster than rents this year, which means the gap should get even smaller.
In harder hit markets like Phoenix, Las Vegas, California and Florida, where prices have tumbled more than 40 percent, sales are rising because first-time homebuyers are now able to purchase homes at bargain basement prices. They are also getting help from a federal tax credit that covers 10 percent of the home price or up to $8,000 for first-time buyers who earn up to $75,000 a year, or $150,000 for a couple. The credit expires at the end of November 2009.
