Homes More Affordable Than Renting
Home prices are rapidly rising, but rental prices are as well, and at a faster pace. In more than half of the nation’s largest U.S. metros, Americans likely will find buying a starter home more affordable than renting, according to a newly released report from realtor.com®.
Median rental prices rose 19.8% year over year in January. That has outpaced monthly starter homeownership costs, despite a very competitive housing market, researchers say. For comparison, the monthly costs of buying a home with up to two bedrooms have seen an 11% year-over-year jump, according to realtor.com®. Meanwhile, apartment costs for all unit sizes continue to increase: Studios are up 21% annually, and one-bedroom and two-bedroom units are both up by 19.2%.
In January, the monthly cost of buying a starter home was more affordable than renting a similar-sized apartment in 26 of the 50 largest metros realtor.com® tracks.
“U.S. rental markets are more than making up for lost time, with January data showing national rents continued to surge by double digits over the last year and at a faster pace than for-sale home prices,” says Danielle Hale, realtor.com®’s chief economist. “So much faster, in fact, that even as monthly starter home costs increased in many of the markets that favored buying, rents for a similar-sized unit were 20% higher.”
Rental and homebuying costs are both climbing. But several factors may tip affordability in favor of first-time buying, Hale says. Rents are forecasted to outpace listing price growth in 2022. Also, the majority of property owners recently surveyed say they plan to raise rental asking prices this year.
However, “the buy-versus-rent decision ultimately depends on personal circumstances like where you live, your financial situation, and how long you want to live in your next home,” Hale says. “As mortgage rates continue climbing, those looking to buy their first home in 2022 are more likely to find lower costs now than later in the year, but home selection is expected to improve as we move toward spring when many homeowners target listing their home for sale.”
The following 10 areas topped realtor.com®’s list of metros that favor buying a starter home over renting.
Source: realtor.com®
©National Association of REALTORS®
Reprinted with permission
