NEW YORK (Reuters) - After six years of renting in San Francisco, Kate Wilusz jumped at the chance to swap her tiny apartment for a roomy four-bedroom Victorian home. But she is paying a mortgage instead of rent -- and coming out even.
"I could not be more thrilled," said Wilusz, a financial planner who recently closed on the dream house with her husband, Charley.
In some U.S. markets, prices appear to have fallen enough to make buying cheaper than renting. Mix that with mortgage rates that are near record lows and renters who want to become buyers are rejoicing.
"The U.S. government is helping bail out those who bought at the top, but I got my own personal stimulus package through falling home prices and low interest rates on mortgages," said Wilusz, who works at Ameriprise Financial.
Wilusz said instinct told her it was time to buy, and her new home costs her as much to own as it would have to rent.
"Everyone was saying home prices in San Francisco would never go down, but any time someone says something will never happen, it usually happens and it is time to be a contrarian," she said.
San Francisco, one of the metropolitan areas covered in the widely watched Standard & Poor's S&P/Case-Shiller Home Price Indices, has shown significant home price depreciation. Home prices fell 3.8 percent in December from November.
San Francisco was also one of the worst-performing cities in terms of year-over-year declines in December, with home prices dropping an average 31.2 percent.
The silver lining in these clouds over California's housing market is clear: Lower prices are luring buyers.
Home sales in California rose 42.5 percent in February from a year earlier as the median home price slid 39.9 percent, driven by sales of foreclosed properties, according to a MDA DataQuick report last week.
The report said 29,225 new and resale houses and condominiums were sold in California last month, down 0.8 percent from January. The median price for a home in the most populous U.S. state was unchanged from January at $373,000.
"You can now own a home in so many areas of the country for less than it costs to rent," said Mollie Carmichael, senior vice president at John Burns Real Estate Consulting in Irvine, California.
Out of the 76 metropolitan area markets across the United States tracked by the company, a whopping 50 percent show that a person can buy a house for less than renting when considering the after-tax cost of homeownership, she said.
Prices have dropped so much in some areas of California that monthly mortgage payments on single-family detached homes are significantly lower than apartment rents.
Carmichael said that in California's foreclosure-plagued Inland Empire, Riverside and San Bernardino counties east of Los Angeles, the average monthly rent for an apartment is $1,157 and the average after-tax monthly mortgage payment on a median-priced single-family detached home is $971 - and is projected to decline to $872 by mid-year.
"It is one of the best times to buy a home," she said.
The U.S. housing market is in the worst downturn since the Great Depression and its impact has rippled through the recession-hit economy, as well as the rest of the world. Economists contend that the economy might not emerge from its slump unless the housing market stabilizes.
Affordability, at least by some measures, is at a record high right now.
The National Association of Realtors' housing affordability index surged 13.6 percentage points in January to 166.8, the highest since tracking began in 1970.
"A family earning the median income could afford to purchase a home that cost 59 percent more than the median priced home," said Celia Chen, a director of housing economics at Moody's Economy.com in West Chester, Pennsylvania.
"Low mortgage rates and rapidly falling house prices are causing the surge in affordability, even though income growth has slowed," she said.
Home prices should fall even further from a weak economy, rising unemployment, significantly tighter lending standards and foreclosures continuing to flood the market, she said.
Interest rates on U.S. 30-year fixed-rate mortgages averaged 4.98 percent for the week ending March 19, according to Freddie Mac. Nine weeks earlier, mortgage rates were 4.96 percent, the lowest since Freddie Mac began surveying them in 1971.
Wellie Chao, an entrepreneur and founder of Micro Office Solutions in New York, plans to buy a Manhattan apartment.
"I am a pragmatic person and prices are starting to come down to where owning really makes more sense and it is always best to buy on the downswing," he said.
A person can rent a one-bedroom apartment in a doorman building in Manhattan for around $2,700 per month, but that person can buy a similar place for $600,000, according to Ray Schmitz of Coldwell Banker Previews International in New York.
Schmitz said with the downpayment and a 740 credit score they can borrow 80 percent and lock in a low 30-year fixed-rate mortgage, lowering their payment to $2,600 per month. The taxes and maintenance fee are usually more than made up for with tax deductions of homeowners, he said.
"The numbers speak for themselves," he said.
Additional Reporting by Lucia Mutikani in Washington and Jim Christie in San Francisco; Editing by Doina Chiacu