Buying a Home: Cost-Effective for Some Renters

For Americans debating whether to buy or rent a home, the scales are tipping toward ownership. Because of the slide in home prices, low interest rates and tax incentives, renters are realizing they could handle a mortgage for a just little more money.

An Associated Press analysis of 45 metro areas finds the gap between the monthly mortgage payment on a median-priced home and the median rent has shrunk from $777 a month to just $221 in the past three years.

In some metro areas, the gap was less than $100 a month. And home prices are expected to fall faster than rents this year, which means the gap should get even smaller.

It could mean a quicker end to the housing-market doldrums, as renters buy up unsold homes languishing on the market.

Cheap foreclosures in some of those markets are now drawing multiple bids. As supply and demand even out, home prices will eventually begin to rise. But for now buyers are having little trouble finding bargains.