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Rent is now more affordable than buying in every major US market

Publish Date: March 26, 2024

Written by Ben Verde

- Originally published at Inman News - Ben Verde

Austin and Seattle were the friendliest cities for renters as the monthly mortgage payment on a starter home in each of the top 50 cities soared above the average rent by more than $1,000.

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Elevated mortgage rates, high home prices, and low inventory have combined to make renting more affordable than buying in all of the top 50 United States metro areas, according to a new report Tuesday from Realtor.com.

Mortgage payment on a starter home in any of the top 50 most populated cities in the nation now costs an average of  $1,027 or 60 percent higher than the typical rent payment, the Realtor.com data shows.

At the same time last year, only 45 of the top 50 cities favored renting, while renters could expect to save an average of just $865 per month compared to buyers. The metro areas that flipped from buy-favoring to rent-favoring over the past year were Pittsburgh, Memphis, St. Louis, Baltimore, and Birmingham.

“With rents continuing to fall and the cost of buying a home remaining high, exacerbated by the rise in mortgage rates in the later half of 2023, renting a home 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 are poised to save the most compared to buyers is Austin, Texas, where renters can expect to save $2,165 per month or 141.5 percent compared to homebuyers in the current high mortgage rate environment. The Austin area was followed by Seattle, where renters can expect to save $2,422 per month or 121.1 percent.

Most of the cities where renters stand to save the most were expensive cities with high concentrations of tech workers, the report noted, with San Francisco, San Jose, New York, and Boston all in the top 10 list.

As rents increase in some markets though, the advantages to renting over buying are starting to slip in some of those same cities. In the San Jose area, for example, while renters stand to save $2,780 per month compared to those buying a starter home — that’s $115 less than they would have saved a year ago, while renters in Dallas have seen their savings fall by $45 annually, and by $29 in San Francisco.

The report notes that while renters stand to save in the short term, homebuying still carries more long-term benefits, even with high costs.

“The financial scales have tipped monthly costs in favor of renting over buying, but it does not bring the benefit of housing wealth gains over time that owning does, and movers should consider their long-term housing plans and personal situation as they make this decision,” Hale said.

all cities for A mortgage payment on a starter home in any of the top 50 cities now costs an average of $1,027 more than the typical rent payment

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