Renters in the United States could now save an extra $1,000 a month compared to those looking to buy their first starter home.
That is according to a new report by Realtor.com, which analyzed the monthly cost of buying a starter home with zero to two bedrooms. For the analysis, the real estate website assumed a buyer would put in an 8% down payment and use the 30-year fixed mortgage rate. The analysis also included other costs of homeownership such as HOA fees, taxes, and homeowners insurance.
In the top 50 metro areas in the US, the analysis found that the cost of buying a starter home was $1,067, or 61.3%, higher than renting a home. Additionally, the analysis found that renting is now the more affordable option than buying in all 50 of the largest metro areas in the nation. In contrast, the number of metros favoring renting was only 47 in the same period last year.
As of July, the median asking rent in the 50 largest metros was $1,741. In comparison, the median price of a home was $439,950, bringing the average monthly cost of homeownership to $2,808.
"With such cost comparisons, we are able to identify whether a market favors renting or buying," Realtor.com economist Jiayi Xu noted. "This is particularly important given today's landscape, marked by elevated mortgage rates and still-high home prices, posing substantial challenges for would-be homeowners."
Top Metros Favoring Renting Over Buying
In the top 10 rent-favoring metro areas, the difference between buying and renting costs was, on average, $1,944 or 94.1%. In most of these markets, there was a higher concentration of tech workers and high earners.
Austin-Round Rock, Georgetown, TX
Median Rent: $1,468
Monthly Homeownership Costs: $3,588
Difference (in dollars): $2,120
Seattle-Tacoma-Bellevue, WA
Median Rent: $2,068
Monthly Homeownership Costs: $4,286
Difference (in dollars): $2,222
Los Angeles-Long Beach-Anaheim, CA
Median Rent: $2,797
Monthly Homeownership Costs: $5,581
Difference (in dollars): $2,784
Nashville-Davidson-Murfreesboro-Franklin, TN
Median Rent: $1,500
Monthly Homeownership Costs: $2,899
Difference (in dollars): $1,399
Phoenix-Mesa-Chandler, AZ
Median Rent: $1,524
Monthly Homeownership Costs: $2,920
Difference (in dollars): $1,396
Columbus, OH
Median Rent: $1,194
Monthly Homeownership Costs: $2,284
Difference (in dollars): $1,090
Dallas-Fort Worth-Arlington, TX
Median Rent: $1,481
Monthly Homeownership Costs: $2,788
Difference (in dollars): $1,307
San Francisco-Oakland-Berkeley, CA
Median Rent: $2,770
Monthly Homeownership Costs: $5,212
Difference (in dollars): $2,442
New York-Newark-Jersey City, NY-NJ-PA
Median Rent: $2,887
Monthly Homeownership Costs: $5,229
Difference (in dollars): $2,342
Boston-Cambridge-Newton, MA-NH
Median Rent: $2,973
Monthly Homeownership Costs: $5,309
Difference (in dollars): $2,336
