Since February, it has been cheaper to rent a house than to buy one in the 50 largest US metropolises – and by an astonishingly large proportion, according to a recent study.
For a so-called “starter home” in one of these sought-after cities – which some claim no longer exists due to exorbitant borrowing rates and inflationary property prices – it costs 60, 1% less to rent the property than to own it. on a monthly basis, according to Realtor.com’s February 2024 rental report.
On average, the high premium for homeownership amounts to around $1,027 in monthly costs – although in the most desirable cities this figure more than doubles.
In Austin, Texas, for example, the gap between renting and buying was widest, according to the Realtor.com report previously reported by the Daily Mail.
The monthly cost of buying a first-time home — a zero to two-bedroom home, according to Realtor.com — in the Austin area was $3,695 in February. The sum was a staggering 141.5% – or $2,165 – more than the typical monthly rent of $1,530 in the Texas capital.
Seattle’s real estate market also had a wide disparity between buying and renting: the monthly cost of buying a first home was $4,422 in February, while the median rent was $2,000, or a difference of 121.1%, according to Realtor.com.
And in Phoenix, Arizona, the cost of monthly rent, averaging $1,543, was nearly half of the $3,071 a month it would take to buy.
Although it is more expensive to buy a home in the top 50 U.S. metros, San Francisco, Los Angeles, San Jose and Sacramento in California, as well as Nashville, Portland and Houston round out the top 10 cities with the biggest difference. between purchase and rental.
For reference, in Realtor.com’s February 2023 Rental Report, renting a first home was found to be more affordable than buying in 45 of the largest U.S. cities.
Over the next 12 months, Memphis, Tennessee; Birmingham, Ala.; Pittsburgh, Pen.;, St. Louis, Mo.; and Baltimore, Maryland, have shifted from a preference for homeowners to a preference for renters, according to the Daily Mail.
Realtor.com — which assumed an 8 percent down payment, a 6.78 percent mortgage rate and included the cost of taxes, insurance and fees in its calculations — noted that buying a first home becomes more and more expensive as the price of monthly rents falls. at a rate faster than purchasing costs.
In February, purchasing costs fell 1.6% over the previous 12 months, while rent costs fell 4.44%.
The biggest factor is high mortgage rates, Realtor.com said.
In February, the average rate for a 30-year fixed-rate mortgage was 6.78%, according to the real estate listings site, up from 6.26% 12 months earlier.
Rising rates have made buying a mortgage so unaffordable that there are now a growing number of buyers that Redfin calls “nepo” buyers – a reference to the “nepo baby” phenomenon where children of celebrities ride on their tails to gain a foothold. a career.
According to a recent Redfin survey, 36% of Gen Zers, ages 12 to 27, and Millennials, ages 28 to 43, are expecting a cash gift from family members in order to fund their down payment, which is twice as much as there was. barely five years ago.
16% plan to use an inheritance to fund their down payment, and 13% plan to live with their parents or other family members.
New York Post
