For Immediate Release
Alan Barber, (202) 293-5380 x 115
Costs of Renting Still Considerably Cheaper Than Ownership
Right to Rent legislation would slow the soaring rate of foreclosures.
WASHINGTON - Though Congress leaves for its August recess this week, one of the
items sure to be on the agenda when it returns is how to deal with the
continuing collapse of the nation's housing market. A new study
from the Center for Economic and Policy Research (CEPR) examining
housing costs shows that market rents are far below ownership costs in
many parts of the nation.
The paper, "The Gains from Right to Rent,"
analyzes the costs of renting versus owning a house in several major
cities and finds that the Fair Market Rents in these metropolitan areas
is often much lower than the cost of ownership.
"Ordinarily,
the gap between owning and renting is not that large," said Dean Baker,
Co-Director of CEPR and an author of the report. "Due to the enormous
run-up in house prices over the housing bubble years, however,
ownership costs now vastly exceed rental costs in many of the bubble
markets and homeowners in these markets have much to gain from having
the opportunity to remain in a home as a renter following a
foreclosure."
The report
looks at the costs of renting and owning before and after taxes in 16
metropolitan statistical areas (MSAs) and details substantial savings
gained from renting across all scenarios depicted. The various
scenarios consider the costs of mortgage payments, property taxes,
insurance and maintenance costs, and mortgage deductions. An appendix
is included that compares ownership and rental costs across 100 MSAs as
well.
Under Right to Rent legislation,
Congress would temporarily alter foreclosure laws to let foreclosed
homeowners remain in their homes as renters for a substantial period of
time. This would save families from being kicked out of their homes and
would go far to stop the blight of foreclosures affecting many of our
communities. This plan requires no taxpayer dollars and no new
bureaucracy to implement.
"The loan modification plans put forth
so far aren't working," continued Baker. "They are unlikely to benefit
more than ten percent of homeowners facing foreclosure and are slow to
go into effect. Right to Rent, on the other hand, would benefit millions and could go into effect immediately."
The full report on homeownership and rental costs can be found here. More details on the Right to Rent plan can be found here.
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The Center for Economic and Policy Research (CEPR) was established in 1999 to promote democratic debate on the most important economic and social issues that affect people's lives. In order for citizens to effectively exercise their voices in a democracy, they should be informed about the problems and choices that they face. CEPR is committed to presenting issues in an accurate and understandable manner, so that the public is better prepared to choose among the various policy options.