Buying Is Cheaper Than Renting in a Growing Number of Cities, New Realtor.com® Analysis Finds

Home shoppers who want to take advantage of trend may need to act sooner rather than later

– Buying a home was equal to or more affordable than renting in 15 of the 50 largest metros in the U.S.; nine other markets were within 5% of flipping in favor of buying

Monthly cost to purchase a median priced home in the 50 largest metros was $1,988, compared to the median monthly rent of $1,727

– Cleveland, Chicago, Pittsburgh, Riverside, Calif. and Miami among cities where it’s cheaper to buy

– San Jose, California, Austin, Texas, Sacramento, Seattle and San Francisco top the list of cities that favor renters

Santa Clara, CA, March 2, 2021 (PRNewswire) – Despite double-digit increases in home prices and a record low number of homes for sale, buying is becoming more affordable in a growing number of the nation’s largest cities, according to a new buy versus rent analysis released today by realtor.com®.

The analysis, which compared the monthly cost of buying a median priced home to the median price of renting a two- to four-bedroom unit in each of the top 50 markets in January 2021, found buying cost the same or was cheaper in 15 of the nation’s 50 largest metros, up from 13 a year ago. Moreover, nine other markets were within 5% of flipping in favor of buying — Atlanta; Orlando, Fla.; Birmingham, Ala.; Phoenix; Buffalo, N.Y.; Memphis, Tenn.; Washington, D.C.; Las Vegas and Milwaukee.

“There isn’t a one-size-fits-all answer to the question of whether it makes more sense to buy than rent. However, this is encouraging news for the millions of millennials who are approaching peak homebuying age and may be considering shopping for a home this spring,” said realtor.com® Chief Economist Danielle Hale. “With interest rates expected to rise over the coming months, buyers may need to act sooner rather than later to take advantage of today’s affordability or be prepared to adjust their target purchase price.”

Thanks to historically low interest rates, the monthly cost to purchase the median price home in the U.S. increased a mere 0.2% year-over-year to $1,988, despite the double-digit growth in home prices. The cost to rent was up 2.4% to $1,727.

On average, buying the median priced home accounted for 32% of a metro’s median income, just slightly above the upper limit of the budgeting rule of thumb of spending 30% of gross income on housing costs. The cost to rent accounted for 27%.

Below average listing prices made it more affordable to buy
In the top 10 metros that favored buying over renting — Cleveland, Chicago, Pittsburgh, Riverside, Calif., Miami, New Orleans, Baltimore, Tampa, Fla., Hartford, Conn. and Detroit —  the median listing price of a home averaged 7.7% lower than January’s national median listing price of $346,000, while rents were 0.7% greater than the top-50 average. The monthly cost of buying in these metros dropped 0.2% compared to last year, while rents have risen 4.9% during that same period. The end result is that those who buy in these metros are able to save an average of 11% of their monthly costs compared to renters.

Markets that Favor Buying

RankMetroMedian Listing
Price
Buy (monthly)RentBuy
Percent
of
Income
Rent Percent of Income
1Cleveland-Elyria, Ohio$198,000$967$1,19519%23%
2Chicago-Naperville-Elgin, Ill.-Ind.-Wis.$338,000$1,691$1,97526%31%
3Pittsburgh, Pa.$245,000$1,250$1,44523%27%
4Riverside-San Bernardino-Ontario, Calif.$485,000$2,224$2,53637%43%
5Miami-Fort Lauderdale-West Palm Beach,
Fla.
$400,000$2,092$2,35040%45%
6New Orleans-Metairie, La.$320,000$1,401$1,54531%35%
7Baltimore-Columbia-Towson, Md.$325,000$1,561$1,69321%23%
8Tampa-St. Petersburg-Clearwater, Fla.$302,000$1,494$1,60530%32%
9Hartford-West Hartford-East Hartford,
Conn.
$303,000$1,589$1,70023%25%
10Detroit-Warren-Dearborn, Mich.$265,000$1,277$1,35023%25%
11St. Louis, Mo.-Ill.$250,000$1,167$1,20920%21%
12Philadelphia-Camden-Wilmington, Pa.-
N.J.-Del.-Md.
$328,000$1,752$1,80028%29%
13Minneapolis-St. Paul-Bloomington, Minn.-
Wis.
$370,000$1,681$1,70523%24%
14Louisville/Jefferson County, Ky.-Ind.$250,000$1,085$1,10020%20%
15Indianapolis-Carmel-Anderson, Ind.$279,000$1,190$1,19922%22%

Remote work opportunities tip the scale in favor of renting in tech markets
With working from home becoming a more viable option for many, the nation’s largest tech hubs have seen rents plummet in recent months as residents have chosen to leave urban centers for more affordable options elsewhere. The trend has widened the gap between renting and buying  in tech hubs like San Jose, Calif., Sacramento, Seattle and Los Angeles, where those who choose to rent saved an average of 30% in monthly costs compared to those who buy.

Top Markets that Favor Renting

RankMetroMedian Listing PriceBuy (monthly)RentBuy Percent of IncomeRent Percent of Income
1San Jose-Sunnyvale-Santa Clara, Calif.$1,199,000$5,548$3,20049%28%
2Austin-Round Rock, Texas$460,000$2,467$1,61535%23%
3Sacramento–Roseville–Arden-Arcade,
Calif.
$599,000$2,639$1,81040%27%
4Seattle-Tacoma-Bellevue, Wash.$665,000$2,975$2,06737%26%
5San Francisco-Oakland-Hayward, Calif.$990,000$4,660$3,27847%33%
6Los Angeles-Long Beach-Anaheim, Calif.$1,150,000$4,875$3,43373%52%
7San Diego-Carlsbad, Calif.$850,000$3,775$2,67553%37%
8Portland-Vancouver-Hillsboro, Ore.-Wash.$525,000$2,382$1,69534%24%
9Oklahoma City, Okla.$278,000$1,259$94525%19%
10Richmond, Va.$388,000$1,671$1,30027%21%

Methodology: Purchase and rent costs reflect current costs and do not take into account holding period, price and rent appreciation, and inflation. Purchase costs are based on purchasing with a 30-year fixed-rate, fully amortizing mortgage of 80% (20% down payment), and do include taxes and insurance and are calculated based on realtor.com® metro-level residential listing price data and mortgage rate data for January 2021. Rental prices include data from apartment communities as well as private rentals (condos, townhomes, single-family homes) listed on realtor.com®. All units were two- to four -bedrooms in size so as to be somewhat comparable to the typical home purchase. Household income data is from 2021 Claritas estimates are based on Census data. Only the 50 largest metros (ranked by number of households) were included in this analysis.

The Gap Between Buying and Renting Narrows Nationwide

— Purchasing a home still more expensive in majority of larger metros

— Monthly cost to purchase the U.S. median home was $1,600, compared to the median monthly rent of $1,319 In the fourth quarter of 2019

— Monthly cost to buy fell 1 percent year-over-year, while rent increased by 4 percent

— On average, the cost of buying the median home fell, now accounting for 30 percent of the national median income, while renting remained level at 25 percent

Santa Clara, CA – Jan. 29, 2020 (PRNewswire) After years of skyrocketing home prices, the combination of rising rents, lower mortgage rates and moderating home prices are making purchasing a home more attractive in many of the nation’s largest metros, according to realtor.com®‘s quarterly Rent vs. Buy report released today.

The report, which analyzed the cost of buying versus renting in 593 counties across the U.S., in the fourth quarter of 2019, found that it was cheaper to buy than rent in 16 percent of the counties with populations of 100,000 or more, up from 12 percent a year earlier. Despite homeownership becoming more affordable, it is still cheaper to rent than buy in 84 percent of the nation’s largest counties, including New York City, San Francisco and Los Angeles.

“The move toward a more balanced equation is good news for home sellers during this spring home buying season as more people, especially the large cohort of millennials who turn 30 this year, begin to weigh the cost of buying versus renting,” said realtor.com® Senior Economist George Ratiu. “Due to a combination of factors, we saw the monthly cost to buy a home fall 1 percent year-over-year, while rents increased 4 percent during the same time frame.”

The monthly cost to buy the national median-priced home was approximately $1,600, or 30 percent of the national median household income, in the fourth quarter of 2019, in line with the budgeting rule of spending no more than 30 percent of gross income on housing costs. The cost to rent increased to $1,319, representing 25 percent of the median household income in the fourth quarter of 2019.

Over the past year, 26 of the 593 counties analyzed shifted from being more affordable to rent to being more affordable to buy, including in the Cleveland, Bronx County, N.Y., Indianapolis and Columbia, S.C, areas.

Although it is still cheaper to rent than buy, some of the nation’s most expensive housing markets, including Kings and New York counties in N.Y., along with Santa Cruz County, Calif., saw the gap between renting and buying decrease the most: by 24 percent, 20 percent, and 18 percent, respectively.

Counties Where Buying is More Attractive

The median listing prices in the counties where buying a home was more affordable were on average 53 percent lower than the national median listing price of $300,000. Median rents, while still less expensive, were only 11 percent cheaper on average.

RankCountyPercent of
Income to
Buy
Percent of
Income to
Rent
1Clayton, Ga.18%32%
2Baltimore City, Md.23%35%
3Cumberland, N.J.21%32%
4Richmond, Ga.17%28%
5Vigo, Ind.12%22%
6Wayne, Mich.18%27%
7Muscogee, Ga.20%28%
8Cambria, Pa.11%19%
9Hampton city, Va.22%30%
10Jefferson, N.Y.24%31%

Counties Where Renting is More Attractive 

The median listing prices in the counties where renting is more affordable, were on average 260 percent higher than the national median of $300,000. Median rents, while also more expensive, were only 79 percent more expensive on average.

RankCountyPercent of
Income to
Buy
Percent of
Income to
Rent
1New York, N.Y.117%30%
2Santa Barbara, Calif.116%38%
3Monterey, Calif.90%31%
4San Mateo, Calif.77%31%
5San Francisco, Calif.79%33%
6Marin, Calif.77%33%
7Napa, Calif.69%28%
8Los Angeles, Calif.77%36%
9Kings, N.Y.81%42%
10Maui, Hawaii64%30%

Notes on Methodology

*Purchase and rent costs reflect current costs and do not take into account holding period, price and rent appreciation, and inflation. Purchase costs do include taxes and insurance and are calculated based on realtor.com county-level residential listing price data and mortgage rate data for December 2019. Rental prices are from the U.S. Department of Housing and Urban Development (HUD) data for 2019 50th-percentile rent estimates. Household income data and home-ownership data are from Census Housing Vacancies and Home-ownership data and 2019 Claritas estimates are based on Census data. Only counties with populations of 100,000 or greater are included in the top lists in this analysis.

About realtor.com®

Realtor.com® makes buying, selling and living in homes easier and more rewarding for everyone. Realtor.com® pioneered the world of digital real estate 20 years ago, and today through its website and mobile apps is a trusted source for the information, tools and professional expertise that help people move confidently through every step of their home journey. Using proprietary data science and machine learning technology,realtor.com® pairs buyers and sellers with local agents in their market, helping take the guesswork out of buying and selling a home. For professionals,realtor.com® is a trusted provider of consumer connections and branding solutions that help them succeed in today’s on-demand world. Realtor.com® is operated by News Corp [Nasdaq: NWS, NWSA] [ASX: NWS, NWSLV] subsidiary Move, Inc. under a perpetual license from the National Association of REALTORS®. For more information, visitrealtor.com®.

Media Contact
Cody Horvat – cody.horvat@move.com

Should You Rent vs Buy in 2018? – Economic Insights from realtor.com

It’s the age-old question. Should you rent or buy a home. Every situation is different, sometimes renting is the best option depending on your financial situation or how the economy in your city is doing. Overall homeownership and buying a house have been great ways of building wealth and living the American dream. In today’s video Chief Economist Danielle Hale from realtor.com will discuss how the economy is in 2018 and whether or not you should rent or buy.

Welcome to a new series on economic insights with realtor.com’s chief economist Daniele Hale. In this series, they talk about how factors in the economy can impact the housing market. From the job report, case schiller, new construction, sold homes, rent vs buy all the way to GDP.

Every one of these topics can impact your home’s value and Danielle Hale will help you understand them in a way that will allow you to make informed decisions.

See more at https://www.realtor.com/research