Buying still cheaper than renting in Phoenix, Tucson - Ahwatukee Foothills News: Real Estate

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Buying still cheaper than renting in Phoenix, Tucson

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Posted: Sunday, April 27, 2014 10:35 am

To own or rent, that is the question that continues to weigh on the minds of potential homebuyers everywhere. While the gap may have narrowed over the past year due to rising mortgage rates and home values, buying is still a better bargain than renting in most communities across the country — including Phoenix and Tucson — according to an online real estate company.

Trulia recently reported that even with the rate for a 30-year mortgage fixed at 4.5 percent, buying is 38 percent cheaper than renting nationally and in all of the 100 largest metro areas. The number shrank slightly compared to last year, when homeownership was 44 percent cheaper than renting.

In Phoenix and Tucson, the buying vs. renting margin experienced a similar squeeze. Trulia’s Rent vs. Buy analysis indicates it presently is 33 percent cheaper to buy than rent in metro Phoenix, and 42 percent less expensive in Tucson, compared to 46 percent and 48 percent, respectively, last year.

Trulia’s research assumes three main conditions: that you will stay in the home seven years; that you itemize federal tax deductions in the 25 percent bracket; and that your 30-year, fixed-rate mortgage rate is 4.5 percent, with a 20 percent down payment. The company’s calculations take into account the cost of buying and renting for identical sets of properties, including maintenance, insurance, taxes, closing costs, down payment, sales proceeds and monthly mortgage and rent payments.

In general, today’s rent vs. buy discussion is driven by simple supply and demand and the market correction that occurred in residential real estate following the Great Recession, when home prices fell by 56 percent. Homeownership became more affordable for some, but at the same time, displaced homeowners flooded the rental market, causing significant rent increases. “Rising rents hurt affordability relative to incomes, but rising rents make buying look cheaper in comparison,” writes Trulia chief economist Jed Kolko on the Trulia Trends blog.

So, when will we reach the tipping point where renting becomes cheaper than buying? Kolko says in all but the most extreme markets, homeownership will be less expensive than renting until mortgage rates hit 10.6 percent — and rates haven’t been that high since 1989.

• Andy Warren is president of Maracay Homes, the Arizona subsidiary of the Weyerhaeuser Real Estate Company. He serves on the board of directors for the Home Builders Association of Central Arizona and Greater Phoenix Leadership; as well as the board of directors and as an Executive Committee member with the Greater Phoenix Economic Council. He is also an active member of the Urban Land Institute.

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Keystone Montessori

[David Jolkovski/AFN]
Teacher Pily Pantoja helps Sarah Wang, 4, with the addition snake game at Keystone Montessori on Thursday, Sept. 4, 2014.

Keystone Montessori has come a long way since its founding in 1995. Back then it was operated out of the founder’s home before eventually moving on to rent rooms from Horizon Presbyterian Church. It was only in 2000 that they had gained a strong enough enrollment to move into the facility where they currently reside on Liberty Lane, just off Desert Foothills Parkway and across from the Ahwatukee Foothills Family YMCA.

The school services students as young as 18 years old, as part of their toddler program, and as old as ninth-graders. The current enrollment is around 320 students, who all have access to Spanish, music and arts programs in addition to the full Montessori curriculum.

“We provide an authentic Montessori education which focuses on the independence and whole development of the child, including academic as well as social and emotional growth,” said head of school Cindy Maschoff. “We want our students to become independent citizens of the world.”

The school will be taking the time to present the concept of Montessori education to the public Jan. 29 and 30. At the presentations the school will provide a clear understanding of what Montessori education looks like at each level of education. Those wanting to attend should plan on going to both meetings, with the Jan. 29 meeting going from 6-7 p.m. and the Jan. 30 meeting from 9 a.m. to 1 p.m. The meetings require attendees to RSVP, which can be done by emailing

For more information, visit

• Compiled by James Gingerich.

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