Why Rent When Buying is Cheaper?

The foreclosure crisis has knocked down prices so much in some parts of the country that it’s cheaper or only slightly more expensive to own than it is to rent.

BusinessWeek, with help from research firm Reis, calculated ownership costs assuming a fixed-rate, 30-year mortgage for 100 percent of the purchase price with no down payment. The magazine said that had they factored in a 20 percent down payment – what most people must make these days – owning would have been cheaper than renting in most metros.

"It's a great time to buy," says Mollie Carmichael, senior vice-president of John Burns Real Estate Consulting in Irvine, Calif. "If you can own a home for less than the cost to rent, then it's a logical financial proposition."

Here are the top-10 cities where buying is a bargain and the own vs. rent cost ratio for each:

Detroit, 94 percent
Pittsburgh, 97 percent
Rochester, NY, 113 percent
Memphis, 114 percent
Tampa, 115 percent
Cleveland, Tenn., 119 percent
Dayton, Ohio, 119 percent
Columbia, S.C., 123 percent
Orlando, 124 percent
Dallas-Fort Worth, 124 percent

Source: Business Week, Prashant Gopal (08/20/2009)