Austin and Seattle are the most renter-friendly cities, with monthly mortgage payments for starter homes in each of the top 50 cities being more than $1,000 higher than the average rent.
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Statistically, rising mortgage rates, high home prices, and low inventory have made renting more affordable than buying in all of the top 50 U.S. metro areas. A new report released Tuesday by Realtor.com.
In the nation’s 50 most populous cities, the mortgage cost to buy a starter home now averages $1,027, 60 percent more than a typical rental, according to Realtor.com.
During the same period last year, only 45 of the top 50 cities favored renting, and renters only saved an average of $865 per month compared to home buyers. Metro areas that have shifted from a preference to buy to a preference for renting in the past year include Pittsburgh, Memphis, St. Louis, Baltimore and Birmingham.
“As rents continue to fall and the cost of home ownership remains high, compounded by rising mortgage rates in the second half of 2023, renting is now a more cost-effective option in all major U.S. markets,” said Danielle. Hale, chief economist at Realtor.com.
The city where renters save the most compared to homebuyers is Austin, Texas, where renters can expect to save $2,165 per month in the current high mortgage rate environment, or 141.5% less than homebuyers. Following the Austin area is Seattle, where renters can expect to save $2,422 per month, or 121.1%.
The report notes that most of the cities where renters save the most are higher-cost-of-living cities with high concentrations of tech workers, with San Francisco, San Jose, New York and Boston all ranking in the top ten.
However, as rents rise in some markets, the advantages of renting over buying are starting to fade in some cities. In the San Jose area, for example, renters save $2,780 per month compared to those who buy a starter home, $115 less than a year ago, while renters in Dallas are saving $45 less per year, San Francisco is $29 lower.
The report points out that while renters can save money in the short term, buying a home can still bring more long-term benefits, even if the cost is high.
“The financial balance tips the monthly costs in favor of renting rather than buying, but it doesn’t bring the same benefits of housing wealth growth over time as owning does, and movers should consider their long-term future when making this decision. housing program and individual circumstances,” Hale said.
All Cities Across the top 50 cities, the mortgage cost to buy a starter home is now an average of $1,027 more than a typical rent
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