While renting a home has long been considered the lower-cost option over buying, experts now say the tides are changing in many parts of the country, including New York City, Miami and other large metropolises, where home prices have dropped significantly in the financial downturn. Former renters are now taking advantage of these prices, along with the homebuyer tax credit and lower mortgage rates, according to the New York Times, which has created a rubric for determining whether buying or selling is the way to go. Some industry experts say if the ratio of buying to renting is well-below 20 — as it is in some neighborhoods of New York City and in parts of South Florida — it might be time to ditch the lease and sign the deed.

The Obama administration plans to use $4.25 billion in economic
stimulus money for the creation of subsidized rental housing units in
cities across the country. The money would pay for both the
construction of new apartment buildings and the refurbishment of
foreclosed homes. An additional $4 billion of the $14 billion that the
Department of Housing and Urban Development received from the federal
stimulus package will go toward repairing the nation’s current public
housing stock. The program marks a drastic shift from former President
George W. Bush’s “ownership society,” the idea that the ultimate goal
for all Americans should be home ownership. But opponents of the Obama
administration’s proposal warn that sometimes rent can be more
expensive than a mortgage. [more]

Federal officials at the Treasury Department are considering a plan
that would allow borrowers who are behind on mortgage payments to avoid
eviction by renting their homes instead. Under the plan proposed by
economist Dean Baker of the Center for Economic Policy Research, a
bankruptcy judge would help determine a fair rent for the property.
Banks would be able to sell the occupied homes, but the lease would
remain in effect even if the ownership changed. Officials are still
figuring out how to replace a loan with a rental lease without
disrupting the overall mortgage market. Two possible methods that are
being considered by government officials are paying cash to
mortgage-service companies to take part in the new program or selling
homes to a third party that would write rental agreements. [more]