According to a heat map embedded in a recent RealtyTrac analysis, it is more affordable to buy a home in the Hampton Roads area than it is to rent a similar home here.
This is because it takes 46.4% of the average persons salary to pay the average cost of a mortgage on a $240,000 home and 47.8% of that same person's salary to pay an average monthly rent of $1,577.
This is good, but potentially ominous news because the spread between the two numbers is so small. 1.4% is a small gap considering the likelihood that interest rates will increase this year. If 30 year fixed interest rates go up to 4.6% as suggested by Kiplinger.com's most recent interest rate forecast, should people stop buying and start renting?
According to Jonathan Smoke's realtor.com article The Misleading Math Behind the Rent vs. Buy Calculation, the answer to that question is a resounding no! He argues that although the mortgage and rent payments seem to be achieving the same goal, they are not equal for one, often overlooked, reason. That reason is called equity.
Jonathan explains it quite thoroughly in his article so I suggest that you read it.
The main point is that after I pay rent and live in a Virginia Beach house for a certain amount of time, I walk away from the deal with nothing, but after I pay a mortgage for that same period of time, I walk away with the ability to sell my Virginia Beach home and use my equity to help me to buy another home. This effect increases the longer you live in the same place.
Jonathan says that the type of rent vs. buy comparison done by RealtyTrac overlooks the aspect of the mortgage that is much like a forced savings account. So that even when interest rates make rents cheaper than mortgages, it will still be better to buy over the long run, because buyers eventually can sell their home to benefit from the many years of payments they made, whether or not they could have spent less to rent.