- by admin
- Comment Off
- 299 views
Buying a starter home in the top 50 metros cost $1,111 (60.3%) more than renting in August, as median U.S. rents see fourth consecutive month of year-over-year declines The elevated mortgage rates, steep home prices and declining rent costs familiar in today’s housing market have made it less costly to rent than to buy a starter home in all but three of the largest metros in the U.S., according to the Realtor.com® Monthly Rental Report. In August 2023, the cost of buying a starter home in the top 50 metros was $1,111 (60.3%) higher than renting in those markets on average. “Rents have registered steady declines for the past four months and, while they remain well above pre-pandemic levels, when you factor in the impact of record-high mortgage rates and high home prices, it’s understandable that many would-be homebuyers are choosing to remain on the sidelines,” said Danielle Hale, Chief Economist at Realtor.com®. “The downward trend in rental prices reduces the sense of urgency, giving renters more time to save for a home. In the period ahead as rents soften, we expect more households will remain renters for longer.” August 2023 Rental Metrics – National Unit Size Median Rent Rent YoY Rent Change – 4 years Overall $1,752 -0.6 % 23.7 % Studio $1,463 -0.2 % 18.4 % 1-bed $1,634 -0.5 % 23.6 % 2-bed $1,948 -0.7 % 26.4 % Nationally, rents drop for fourth straight month, while homebuying costs increaseMedian rents for 0-2 bedroom units declined consistently year-over-year for the past four months which, when combined with mortgage rates hovering above 7% and a low enough supply to drive prices up despite subdued demand, tipped the scales further in favor of renting. In August, homeownership costs exceeded renters’ monthly costs by nearly $300 compared with the start of the year. Renting beats buying in nearly all major metros, and the advantage is increasingIn August, renting was more affordable than buying a starter home in 47 of the 50 largest metros, up from 45 during the same time last year. Declining rents and the increasing costs of buying a home contributed to the jump in savings from renting. While skyrocketing mortgage rates pushed up the cost of taking on a mortgage, climbing home prices expanded the base of mortgages as well, making buying even less affordable compared to renting. The advantage of renting continues to grow in all rent-favoring markets. In the top 10 metros that favor renting over buying, most of which have a higher concentration of tech workers and high earners, both the average cost to rent and to buy are higher than the national average. Austin, Texas topped the list of markets that favor renting, where the monthly cost of buying a starter home was $3,946 – 136.3% more than the monthly rent – for a monthly savings of $2,276. Meanwhile, Baltimore and St. Louis flipped from buy-favoring to rent-favoring markets during the past 12 months. In markets favoring buying, the advantage is shrinkingIn August 2023, only three of the top 50 U.S. metros favored buying starter homes rather than renting: Birmingham, Ala., Memphis, Tenn., and Pittsburgh; however, the cost-benefits of buying have decreased since the same time last year. As the benefit of buying diminishes in these markets, prospective homebuyers will need to consider all trade offs when deciding whether to buy or continue renting. This is particularly important given that today’s elevated mortgage rates and still-high home prices pose substantial challenges for would-be buyers. To help homebuyers better understand their options, as part of its RealCost set of tools, Realtor.com® offers a free rent or buy calculator, which estimates how long a new homebuyer would need to remain in their home for buying to make more financial sense than renting. “As we noted in our July Rental Trends report, seasonality and recent momentum in the rental market make it very unlikely the market will see a new peak rent in 2023,” said Jiayi Xu, Economist at Realtor.com®. “Still, rents remain well above pre-pandemic levels, contributing to ongoing affordability concerns for renters, regardless of whether they plan to rent or buy in the months ahead.” Top 10 Metros that Favor Renting over Buying in August 2023 Metro MedianRent MonthlyBuy Cost $Difference(Buy-Rent) %Difference(Buy-Rent) RentYY Buy CostYY Austin-Round Rock-Georgetown, TX $1,670 $3,946 $2,276 136.3 % -8.0 % 9.2 % San Francisco- Oakland-Berkeley, CA $2,906 $5,859 $2,953 101.6 % -4.9 % 12.7 % Columbus, OH $1,222 $2,458 $1,236 101.1 % 2.7 % 35.1 % Sacramento-Roseville- Folsom, CA $1,898 $3,779 $1,881 99.1 % -3.9 % 29.9 % Los Angeles-Long Beach-Anaheim, CA $2,892 $5,672 $2,780 96.1 % -2.3 % 23.3 % San Jose-Sunnyvale-Santa Clara, CA $3,367 $6,581 $3,214 95.5 % -0.2 % 23.3 % Portland-Vancouver- Hillsboro, OR-WA $1,709 $3,314 $1,605 93.9 % -5.2 % 13.8 % Boston-Cambridge- Newton, MA-NH $2,851 $5,526 $2,675 93.8 % 3.2 % 24.4 % Seattle-Tacoma- Bellevue, WA $2,168 $4,156 $1,988 91.7 % -3.7 % 21.0 % Phoenix-Mesa-Chandler, AZ $1,595 $3,015 $1,420 89.0 % -4.5 % 17.7 % SOURCE Realtor.com
Read More
