ANDERSON — Owning a home may not be the American dream it once was, but in many cities across the country, it’s more economical than ever.

Indianapolis appears near the top of a list compiled from a new study by personal finance website that identified more than two dozen cities where it’s less expensive to buy a home than rent an apartment. Consulting data from Zillow, researchers calculated the average cost of a mortgage using a formula that included the median price of a home, assuming a 20% down payment, a 30-year fixed mortgage with an interest rate of 3.82%, local property taxes and homeowners insurance. The Circle City ranked No. 8 on the list, not far behind cities like Baltimore, Cleveland and Toledo — metropolitan areas perceived by many as suffering through recent severe economic declines — which surprised some analysts.

“I was very impressed that a city like (Indianapolis) could make the list,” said Andrew DePietro, lead researcher and data analyst for GoBankingRates. “You have cities like Baltimore and Cleveland that are going through some form of decline, so that makes sense. Indy is an excellent bargain because a lot of Midwest cities are facing that industrialization trend, but Indy has dealt with it far better. That’s an excellent bargain, especially for a Midwest city that’s not declining.”

For communities surrounding Indianapolis — including Anderson — the issue of owning vs. renting is closely connected with other matters of economic development. Home ownership brings with it a sense of permanence and ongoing responsibility — maintenance, upkeep, snow removal, etc. — that many apartment dwellers aren’t concerned with.

But besides the barriers to home ownership — which can include poor credit, lack of savings for a down payment and excessive debt-to-income ratio — many younger would-be buyers simply prefer more disposable living situations.

“They want the houses, they want the yards, but they don’t want the high rent,” says Tim Perry, who owns a property company that rehabilitates and rents properties in Anderson. “But more importantly, they don’t want the maintenance. They don’t want to take on the responsibilities, they don’t want to move the heavy furniture. With our (tenants), almost every one of them has a plan to move every two to five years. Renting is a one-year commitment, which is much better to them than a 30-year mortgage.”

Property tax revenue is another component that many economic development specialists consider as they develop growth plans for their cities. In Indiana, property taxes on rentals are capped at 2 percent, while those taxes on residential properties are capped at 1 percent of a property’s assessed fair market value.

Kim Townsend, executive director of the Anderson Housing Authority, says the long-term commitment of home ownership is a key to stabilizing neighborhoods and promoting a sense of community.

“You need people who are invested into that (mindset) and will work to improve their properties, which improves the neighborhood,” Townsend said.

But as Anderson continues to recover from the demise of its General Motors factories and, more recently, the recession of the late 2000s that depressed property values, other officials say the key to continued growth is finding the right balance of homeowners and renters. According to 2017 data from the U.S. Department of Housing and Urban Development (HUD), Anderson had 13,415 homeowners and 9,600 renters. Closer to Indianapolis, the disparity grew, with 484,070 homeowners as opposed to 244,145 renters in the region that includes Indianapolis, Carmel and Anderson.

“I think that mix is really important,” says Greg Winkler, executive director of the Anderson Economic Development Department. “We need to be able to provide rentals to people who can’t clear the mortgage hurdle yet. It’s not easy to get through that process, so for the people who maybe aren’t ready, we need to be able to provide some high quality places for them to live so they can save, build credit and get ready for that first purchase.”

Follow Andy Knight on Twitter @Andrew_J_Knight, or call 765-640-4809.

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