Before you start hunting for the perfect house, a Trulia report found that homeownership is still much cheaper than renting nationally and in all of the 100 largest metro areas. However, rising rates have narrowed the margin between the two.
To compare the costs of owning and renting, we assume people get a 4.8% mortgage rate on a 30-year fixed-rate loan with 20% down; itemize their federal tax deductions and are in the 25% tax bracket; and will stay in their home for seven years. Under these assumptions, buying is 35% cheaper than renting nationwide, taking into account all of the costs and proceeds from buying or renting over the entire seven-year period.
Trulia also included a helpful interactive map that highlights the places where it is cheaper to rent or buy.