For Aaron Carter, a musician who was struggling to fit a drum set, a piano and three guitars into his 600-square-foot apartment in Phoenix, the math on owning a home finally began to work in his favor.
Rent for the apartment he shared with his wife: $615. Mortgage payment for a home with twice the space: $760. And the interest on a mortgage is tax-deductible. So they jumped at the chance to buy some elbow room.
"We figured that everything together, getting more space, getting out of the apartment life and also just the prices right now, it just was the perfect time for us as a couple" to buy, said Carter, 20.
For Americans debating whether to buy or rent their homes, 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.
It could mean a quicker end to the housing-market doldrums, as renters buy up unsold homes languishing on the market.
In some metro areas, including Cleveland, Atlanta, Indianapolis and St. Louis, 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.
In once-inflated markets like Phoenix, Las Vegas and inland swaths of California and Florida, where prices have tumbled more than 40 percent, sales are rising because first-time homebuyers are snapping up bargain-priced homes.
They are getting help from a federal tax credit that covers 10 percent of the home price or up to $8,000 for first-time buyers who earn up to $75,000 a year, or $150,000 for a couple. The credit expires at the end of November.
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.
Jere Ross, an Air Force vehicle operator, and his wife recently bought a four-bedroom, 1 1/2-bath house in Zephyrhills, Fla., a Tampa suburb, for $86,500 rather than jump into another yearlong apartment lease.
Ross, 23, used a Veterans Administration loan, which doesn't require a down payment, and got a 30-year mortgage at a fixed rate of 5.5 percent. His monthly payment comes to $700 a month, including property taxes and insurance — $110 less than he paid to rent an apartment nearly half the size.
"It just came to a point where we were just throwing our money away on rent," Ross said. "When it came to find out that we could own this house for, less than what we're paying in rent, it was a 'no duh!' kind of moment."
The study, conducted for the AP by Marcus & Millichap Real Estate Investment Services, used prices for the first three months of this year.
It calculated mortgage payments by assuming a 10 percent down payment, a 30-year fixed loan at 5.15 percent, and taxes and insurance that added up to 1.5 percent of the purchase price. It assumed borrowers used private mortgage insurance.
While the analysis found the gap between what it costs to own and rent is shrinking, it's still too wide for millions who live paycheck to paycheck.
Renters with jobs in the education, retail and transportation industries don't earn enough to rent the average two-bedroom apartment in many of these major cities, let alone buy, according to a recent study of 200 metro areas by the Center for Housing Policy.
Renters who want to become homeowners also face the obstacles of scraping together a down payment and qualifying for the loan. And renters with a record of paying bills late will have a hard time getting a low interest rate.
"There's still those buyers that are having trouble getting financed," says Brad Snyder, an agent with ZipRealty in Las Vegas. "A lot of them are still just looking for that easy way in, and it's just not there."
Homeowners also have to shoulder many costs renters don't face — association fees, insurance, some utilities. And there are still cities, among them San Francisco and Los Angeles, where it's usually still more affordable to rent — even though home prices have fallen more than 30 percent.
Mike Sigal, a longtime renter in San Francisco, has looked at buying a home for the past couple of years. But buying one comparable to the two-bedroom, two-bath apartment he has now would cost more than $600,000, meaning the mortgage would far exceed his $1,800 rent.
"The math doesn't come out," said Sigal, 42, who runs an information services company. "I've got extreme value for my rent."
Nevertheless, homes in some parts of country are more affordable than they've been in decades. Even Dean Baker, an economist who sounded early warnings about the housing bubble and sold his own condo in 2004, has come around.
Baker, co-director of the Center for Economic and Policy Research in Washington, bought a five-bedroom house last month for $650,000, which he figures is about 20 percent below what it would have gone for at the peak of the market.
"We feel we got a pretty good deal," Baker said.
By buying, he accepted the risk that he might lose money if home values keep dropping. "We'll probably end up more or less even," he said. "Depending how much further down they go."