SANTA CLARA, Calif.,
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
|
Rank
|
Metro
|
Median Listing
Price
|
Buy
(monthly)
|
Rent
|
Buy
Percent
of
Income
|
Rent Percent of
Income
|
|
1
|
Cleveland-Elyria,
Ohio
|
$198,000
|
$967
|
$1,195
|
19%
|
23%
|
|
2
|
Chicago-Naperville-Elgin, Ill.-Ind.-Wis.
|
$338,000
|
$1,691
|
$1,975
|
26%
|
31%
|
|
3
|
Pittsburgh,
Pa.
|
$245,000
|
$1,250
|
$1,445
|
23%
|
27%
|
|
4
|
Riverside-San
Bernardino-Ontario, Calif.
|
$485,000
|
$2,224
|
$2,536
|
37%
|
43%
|
|
5
|
Miami-Fort
Lauderdale-West Palm Beach,
Fla.
|
$400,000
|
$2,092
|
$2,350
|
40%
|
45%
|
|
6
|
New Orleans-Metairie,
La.
|
$320,000
|
$1,401
|
$1,545
|
31%
|
35%
|
|
7
|
Baltimore-Columbia-Towson, Md.
|
$325,000
|
$1,561
|
$1,693
|
21%
|
23%
|
|
8
|
Tampa-St.
Petersburg-Clearwater, Fla.
|
$302,000
|
$1,494
|
$1,605
|
30%
|
32%
|
|
9
|
Hartford-West
Hartford-East Hartford,
Conn.
|
$303,000
|
$1,589
|
$1,700
|
23%
|
25%
|
|
10
|
Detroit-Warren-Dearborn, Mich.
|
$265,000
|
$1,277
|
$1,350
|
23%
|
25%
|
|
11
|
St. Louis,
Mo.-Ill.
|
$250,000
|
$1,167
|
$1,209
|
20%
|
21%
|
|
12
|
Philadelphia-Camden-Wilmington, Pa.-
N.J.-Del.-Md.
|
$328,000
|
$1,752
|
$1,800
|
28%
|
29%
|
|
13
|
Minneapolis-St.
Paul-Bloomington, Minn.-
Wis.
|
$370,000
|
$1,681
|
$1,705
|
23%
|
24%
|
|
14
|
Louisville/Jefferson
County, Ky.-Ind.
|
$250,000
|
$1,085
|
$1,100
|
20%
|
20%
|
|
15
|
Indianapolis-Carmel-Anderson, Ind.
|
$279,000
|
$1,190
|
$1,199
|
22%
|
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
|
Rank
|
Metro
|
Median Listing
Price
|
Buy
(monthly)
|
Rent
|
Buy Percent of
Income
|
Rent Percent of
Income
|
|
1
|
San
Jose-Sunnyvale-Santa Clara, Calif.
|
$1,199,000
|
$5,548
|
$3,200
|
49%
|
28%
|
|
2
|
Austin-Round Rock,
Texas
|
$460,000
|
$2,467
|
$1,615
|
35%
|
23%
|
|
3
|
Sacramento--Roseville--Arden-Arcade,
Calif.
|
$599,000
|
$2,639
|
$1,810
|
40%
|
27%
|
|
4
|
Seattle-Tacoma-Bellevue, Wash.
|
$665,000
|
$2,975
|
$2,067
|
37%
|
26%
|
|
5
|
San
Francisco-Oakland-Hayward, Calif.
|
$990,000
|
$4,660
|
$3,278
|
47%
|
33%
|
|
6
|
Los Angeles-Long
Beach-Anaheim, Calif.
|
$1,150,000
|
$4,875
|
$3,433
|
73%
|
52%
|
|
7
|
San Diego-Carlsbad,
Calif.
|
$850,000
|
$3,775
|
$2,675
|
53%
|
37%
|
|
8
|
Portland-Vancouver-Hillsboro, Ore.-Wash.
|
$525,000
|
$2,382
|
$1,695
|
34%
|
24%
|
|
9
|
Oklahoma City,
Okla.
|
$278,000
|
$1,259
|
$945
|
25%
|
19%
|
|
10
|
Richmond,
Va.
|
$388,000
|
$1,671
|
$1,300
|
27%
|
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.
About realtor.com®
Realtor.com®
makes buying, selling, renting and living in homes easier and more
rewarding for everyone. Realtor.com® pioneered the world
of digital real estate more than 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, visit realtor.com®.
Media Contact
Janice
McDill, janice.mcdill@move.com
View original
content:http://www.prnewswire.com/news-releases/buying-is-cheaper-than-renting-in-a-growing-number-of-cities-new-realtorcom-analysis-finds-301238279.html
SOURCE realtor.com