SANTA CLARA, Calif.,
Aug. 26, 2021 /PRNewswire/ -- As
rents continue to hit new highs and mortgage rates remain low,
buying a starter home now costs less per month than renting a
similar-sized unit in 24 of the 50 largest U.S. metros, according
to the Realtor.com® Monthly Rental Report released
today. The top markets where it's more affordable to buy a starter
home versus rent one include: Birmingham,
Ala. (33.1% lower), St. Louis,
Mo. (29.4% lower), Pittsburgh (27.7% lower), Orlando (25.9% lower) and Cleveland (25.7% lower).
Nationally, rents continued rising at an unusually fast pace in
July, up 9.8% over last year and 12.2% since 2019. All unit sizes
tracked by Realtor.com® posted rent gains and hit new
highs: Two-bedrooms at $1,802
(+10.9%), one-bedrooms at $1,495
(+9.5%) and studios at $1,315
(+5.6%).
"Rents hit new highs in 40 of the 50 largest U.S. metros this
July and grew at an almost double-digit pace – the fastest yearly
rate we've seen in the last 18 months," said
Realtor.com® Chief Economist Danielle Hale. "Sky-high rents and historically
low interest rates have made the monthly cost to buy a
starter home lower than renting one in nearly half the markets
across the U.S. While this is good news for first-time buyers in
these metros, there are plenty of other factors to consider when
deciding whether to become a homeowner, including making sure it's
the right time for you and your family. But if the monthly costs
have been holding you back, data suggests it's worth exploring in
many markets, and although it's still hard to find entry-level
homes, we are seeing more smaller homes coming on the market."
Hale added, many of July's highest rent gains were seen in
secondary markets where rental demand has exploded during COVID,
driven in part by remote work enabling employees to escape crowded,
expensive big cities – at least temporarily. With the future of
remote work uncertain for many Americans, first-time homebuyers saw
less of a frenzy than renters in a number of July's highest-priced
rental markets. This has helped keep monthly starter home costs an
average 15.5% ($216) lower than rents
in nearly half of the 50 largest U.S. metros. (See methodology
below.)
First-time homebuying is relatively more affordable in hot
rental markets
In the top 10 metros that favored first-time
homebuying over renting in July, monthly starter home payments were
an average 24.3% lower than rents, driven in part by lower median
listing prices ($192,000) than the
national average ($297,000). The
types of starter homes for sale also play a key role in monthly
payments, with active inventory in these buyer-friendly metros
including nearly two times the share of single-family starter homes
(56.1%) than in condo-heavy markets that favor renting.
In July, the top 10 markets that favored buying over renting
were: Birmingham, Ala. (33.1%
lower), St. Louis, Mo. (29.4%
lower), Pittsburgh (27.7% lower),
Orlando (25.9% lower),
Cleveland (25.7% lower),
Tampa (22.9% lower), Baltimore (20.5% lower), Indianapolis (20.4% lower), Virginia Beach
(19.2% lower) and Riverside,
Calif. (18.5% lower).
Many of these metros also posted sizeable rent gains over last
year in July, led by Riverside
(+29.7%), where the median rental price of $2,230 was 18.5% ($413) higher than starter home payments, at
$1,817 per month. Even with the surge
in prices, Riverside rents were
relatively lower than in nearby Los
Angeles ($2,742), making the
metro an attractive option to big city renters looking to save
during COVID. Compared to Los
Angeles, first-time homebuyers in Riverside saw 51.5% lower asking prices and
nearly three times the share of single-family starter homes, at
75.1% of entry-level inventory in July.
Renting beats out buying in big tech cities with rents yet to
recover from COVID
Typically some of the nation's
most expensive housing markets, big tech hubs largely favored
renting over buying a starter home in July, partly attributed to
higher condo HOA fees. Among 0-2 bedroom homes in these top 10
cities, over seven-in-ten (71%) were condos, on average, compared
to 58% nationwide, while median HOA fees of $334 among homes that had this fee were 27%
higher than the U.S. median ($263).
Seven of the top 10 markets where monthly starter home costs
were higher than rents are tech-heavy areas, including:
Austin, at 79.2% higher;
San Jose, at 47.5% higher;
San Francisco, at 44.4% higher;
Seattle, at 44.2% higher;
Boston, at 40.9% higher;
Los Angeles at 39.4% higher; and
New York, at 32.0% higher.
While rental prices have surpassed pre-COVID levels in the
majority of U.S. markets, rents in many of the biggest tech cities
have yet to catch up to historical peaks. Among the 50 largest U.S.
markets, the only four where rents declined from last year in July
were all big tech hubs: New York
(-6.1%), Boston (-3.7%),
San Francisco (-2.9%) and
Chicago (-1.4%).
Leading the list of metros that favor renting by a wide margin,
at $1,228 higher monthly starter home
costs than rents, Austin is
currently one of the nation's most competitive housing markets.
While costs like median HOA fees are relatively lower in
Austin compared to other big tech
cities, at $104 versus $1,222 in New
York, first-time homebuyers are competing for limited
affordable options, with 0-2 bedroom home inventory down 59%
year-over-year and prices up 17.5% to a median $431,000 in July.
"Emerging tech hubs like Austin
have seen a surge in housing demand in recent years as more Silicon
Valley companies have opened or expanded offices in these areas.
Relocating employees, including many millennials, can see their
housing dollars go much further, with rental costs roughly half as
high as in San Francisco and
San Jose and starter home costs
more than a third lower. With growth expected to continue in
Austin, there's a premium on real
estate, but California transplants
may find that relative affordability creates first-time homebuying
opportunities," Hale said.
Realtor.com®July 2021 Rental Data - Top
10 Markets that Favor Buying Over Renting
|
Rank
|
Metro
|
% Cost
Difference
(Buy-Rent)
|
$ Cost
Difference
(Buy-Rent)
|
Median
Rent
|
Monthly
Buy
Cost
|
Rent
YoY
|
Buy
Cost
YoY
|
1
|
Birmingham-Hoover,
Ala.
|
-33.1%
|
-$361
|
$1,089
|
$728
|
12.3%
|
28.2%
|
2
|
St. Louis,
Mo.-Ill.
|
-29.4%
|
-$340
|
$1,155
|
$815
|
7.4%
|
13.7%
|
3
|
Pittsburgh,
Pa.
|
-27.7%
|
-$381
|
$1,376
|
$995
|
8.3%
|
18.9%
|
4
|
Orlando-Kissimmee-Sanford, Fla.
|
-25.9%
|
-$403
|
$1,557
|
$1,154
|
16.2%
|
4.5%
|
5
|
Cleveland-Elyria,
Ohio
|
-25.7%
|
-$280
|
$1,089
|
$809
|
6.8%
|
2.4%
|
6
|
Tampa-St.
Petersburg-Clearwater, Fla.
|
-22.9%
|
-$389
|
$1,698
|
$1,309
|
27.2%
|
15.1%
|
7
|
Baltimore-Columbia-Towson, Md.
|
-20.5%
|
-$337
|
$1,647
|
$1,310
|
6.8%
|
7.8%
|
8
|
Indianapolis-Carmel-Anderson, Ind.
|
-20.4%
|
-$235
|
$1,150
|
$915
|
13.5%
|
4.9%
|
9
|
Virginia
Beach-Norfolk-Newport News, Va.-N.C.
|
-19.2%
|
-$256
|
$1,330
|
$1,074
|
11.9%
|
3.1%
|
10
|
Riverside-San
Bernardino-Ontario, Calif.
|
-18.5%
|
-$413
|
$2,230
|
$1,817
|
29.7%
|
17.7%
|
Realtor.com®July 2021 Rental Data - Top
10 Markets that Favor Renting Over Buying
|
Rank
|
Metro
|
% Cost
Difference
(Buy-Rent)
|
$ Cost
Difference
(Buy-Rent)
|
Median
Rent
|
Monthly
Buy
Cost
|
Rent
YoY
|
Buy
Cost
YoY
|
1
|
Austin-Round Rock,
Texas
|
79.2%
|
$1,228
|
$1,550
|
$2,778
|
14.8%
|
17.2%
|
2
|
San
Jose-Sunnyvale-Santa Clara, Calif.
|
47.5%
|
$1,396
|
$2,936
|
$4,332
|
1.4%
|
4.8%
|
3
|
San
Francisco-Oakland-Hayward, Calif.
|
44.4%
|
$1,272
|
$2,865
|
$4,137
|
-2.9%
|
-5.7%
|
4
|
Seattle-Tacoma-Bellevue, Wash.
|
44.2%
|
$872
|
$1,975
|
$2,847
|
5.6%
|
3.1%
|
5
|
Boston-Cambridge-Newton, Mass.-N.H.
|
40.9%
|
$1,001
|
$2,450
|
$3,451
|
-3.7%
|
6.1%
|
6
|
Los Angeles-Long
Beach-Anaheim, Calif.
|
39.4%
|
$1,081
|
$2,742
|
$3,823
|
6.7%
|
9.5%
|
7
|
New
York-Newark-Jersey City, N.Y.-N.J.-Pa.
|
32.0%
|
$773
|
$2,418
|
$3,191
|
-6.1%
|
5.6%
|
8
|
Dallas-Fort
Worth-Arlington, Texas
|
26.9%
|
$382
|
$1,420
|
$1,802
|
13.6%
|
-0.6%
|
9
|
Rochester,
N.Y.
|
26.5%
|
$321
|
$1,210
|
$1,531
|
9.5%
|
-8.0%
|
10
|
Portland-Vancouver-Hillsboro, Ore.-Wash.
|
26.4%
|
$443
|
$1,675
|
$2,118
|
11.7%
|
14.1%
|
Realtor.com®July 2021 Rental Data - 50
Largest Metropolitan Areas
|
Metro
|
Median
Rent
|
Rent
Y/Y
|
Studio
Median
Rent
|
Studio
Rent
Y/Y
|
1br
Median
Rent
|
1br
Rent
Y/Y
|
2br
Median
Rent
|
2br
Rent
Y/Y
|
% Cost
Difference
(Buy-Rent)
|
Atlanta-Sandy
Springs-Roswell, Ga.
|
$1,649
|
18.5%
|
$1,525
|
13.4%
|
$1,555
|
19.1%
|
$1,812
|
20.8%
|
-5.8%
|
Austin-Round Rock,
Texas
|
$1,550
|
14.8%
|
$1,233
|
9.5%
|
$1,430
|
16.7%
|
$1,755
|
17.4%
|
79.2%
|
Baltimore-Columbia-Towson, Md.
|
$1,647
|
6.8%
|
$1,450
|
16.0%
|
$1,569
|
7.1%
|
$1,750
|
5.8%
|
-20.5%
|
Birmingham-Hoover,
Ala.
|
$1,089
|
12.3%
|
$1,105
|
18.2%
|
$1,040
|
12.4%
|
$1,121
|
12.7%
|
-33.1%
|
Boston-Cambridge-Newton, Mass.-N.H.
|
$2,450
|
-3.7%
|
$2,050
|
-7.0%
|
$2,325
|
-3.1%
|
$2,675
|
-8.3%
|
40.9%
|
Buffalo-Cheektowaga-Niagara Falls, N.Y.
|
$1,185
|
7.4%
|
$860
|
8.2%
|
$1,070
|
4.4%
|
$1,350
|
8.0%
|
17.2%
|
Charlotte-Concord-Gastonia, N.C.-S.C.
|
$1,476
|
14.0%
|
$1,340
|
13.8%
|
$1,368
|
13.5%
|
$1,624
|
14.8%
|
-14.7%
|
Chicago-Naperville-Elgin, Ill.-Ind.-Wis.
|
$1,675
|
-1.4%
|
$1,200
|
-16.7%
|
$1,626
|
-2.0%
|
$1,895
|
0.0%
|
-4.7%
|
Cincinnati,
Ohio-Ky.-Ind.
|
$1,188
|
13.1%
|
$1,030
|
1.3%
|
$1,135
|
10.7%
|
$1,269
|
15.4%
|
-1.4%
|
Cleveland-Elyria,
Ohio
|
$1,089
|
6.8%
|
$795
|
2.7%
|
$1,029
|
6.1%
|
$1,190
|
10.2%
|
-25.7%
|
Columbus,
Ohio
|
$1,165
|
10.7%
|
$995
|
10.7%
|
$1,105
|
11.1%
|
$1,250
|
11.0%
|
1.1%
|
Dallas-Fort
Worth-Arlington, Texas
|
$1,420
|
13.6%
|
$1,226
|
14.4%
|
$1,299
|
14.4%
|
$1,682
|
16.8%
|
26.9%
|
Denver-Aurora-Lakewood, Colo.
|
$1,866
|
12.9%
|
$1,548
|
9.0%
|
$1,748
|
13.6%
|
$2,175
|
15.1%
|
14.8%
|
Detroit-Warren-Dearborn, Mich.
|
$1,195
|
8.6%
|
$995
|
5.3%
|
$1,036
|
10.2%
|
$1,340
|
7.6%
|
-14.1%
|
Hartford-West
Hartford-East Hartford, Conn.
|
$1,545
|
7.7%
|
$1,149
|
-2.5%
|
$1,450
|
6.6%
|
$1,750
|
10.9%
|
-16.4%
|
Houston-The
Woodlands-Sugar Land, Texas
|
$1,295
|
7.9%
|
$1,260
|
10.3%
|
$1,185
|
8.2%
|
$1,454
|
7.8%
|
25.2%
|
Indianapolis-Carmel-Anderson, IN
|
$1,150
|
13.5%
|
$964
|
4.2%
|
$1,055
|
12.2%
|
$1,280
|
18.0%
|
-20.4%
|
Jacksonville,
Fla.
|
$1,361
|
17.3%
|
$1,000
|
28.4%
|
$1,260
|
20.6%
|
$1,475
|
19.0%
|
-9.7%
|
Kansas City,
Mo.-Kan.
|
$1,150
|
7.6%
|
$900
|
4.0%
|
$1,034
|
5.0%
|
$1,346
|
8.1%
|
-17.0%
|
Las
Vegas-Henderson-Paradise, Nev.
|
$1,454
|
19.7%
|
$900
|
9.1%
|
$1,340
|
22.4%
|
$1,595
|
21.0%
|
-9.7%
|
Los Angeles-Long
Beach-Anaheim, Calif.
|
$2,742
|
6.7%
|
$2,049
|
2.7%
|
$2,480
|
6.0%
|
$3,288
|
8.8%
|
39.4%
|
Louisville/Jefferson
County, Ky.-Ind.
|
$1,035
|
8.9%
|
$900
|
3.4%
|
$985
|
6.8%
|
$1,135
|
13.5%
|
-18.2%
|
Memphis,
Tenn.-Miss.-Ark.
|
$1,188
|
24.4%
|
$1,050
|
13.5%
|
$1,164
|
24.5%
|
$1,235
|
24.7%
|
---1
|
Miami-Fort
Lauderdale-West Palm Beach, Fla.
|
$2,300
|
20.7%
|
$1,845
|
18.2%
|
$2,030
|
17.3%
|
$2,622
|
17.1%
|
-3.1%
|
Milwaukee-Waukesha-West Allis, Wis.
|
$1,401
|
3.8%
|
$1,075
|
-1.8%
|
$1,300
|
2.0%
|
$1,625
|
6.6%
|
5.9%
|
Minneapolis-St.
Paul-Bloomington, Minn.-Wis.
|
$1,500
|
2.7%
|
$1,215
|
0.9%
|
$1,439
|
2.5%
|
$1,824
|
7.4%
|
-2.9%
|
Nashville-Davidson-Murfreesboro-Franklin,
Tenn.
|
$1,479
|
11.6%
|
$1,525
|
7.3%
|
$1,399
|
12.2%
|
$1,529
|
11.2%
|
11.1%
|
New Orleans-Metairie,
La.
|
$1,340
|
3.1%
|
$975
|
14.7%
|
$1,275
|
0.8%
|
$1,500
|
0.0%
|
15.1%
|
New
York-Newark-Jersey City, N.Y.-N.J.-Pa.
|
$2,418
|
-6.1%
|
$2,145
|
-12.3%
|
$2,235
|
-6.9%
|
$2,720
|
-2.5%
|
32.0%
|
Oklahoma City,
Okla.
|
$859
|
6.8%
|
$685
|
-14.4%
|
$789
|
10.3%
|
$930
|
6.4%
|
7.9%
|
Orlando-Kissimmee-Sanford, Fla.
|
$1,557
|
16.2%
|
$1,390
|
15.8%
|
$1,450
|
17.4%
|
$1,757
|
22.7%
|
-25.9%
|
Philadelphia-Camden-Wilmington,
Pa.-N.J.-Del-Md.
|
$1,635
|
3.5%
|
$1,300
|
2.0%
|
$1,575
|
3.3%
|
$1,820
|
4.0%
|
-9.2%
|
Phoenix-Mesa-Scottsdale, Ariz.
|
$1,643
|
23.5%
|
$1,210
|
28.0%
|
$1,475
|
25.7%
|
$1,840
|
22.7%
|
5.8%
|
Pittsburgh,
Pa.
|
$1,376
|
8.3%
|
$1,220
|
10.9%
|
$1,310
|
8.3%
|
$1,503
|
11.3%
|
-27.7%
|
Portland-Vancouver-Hillsboro, Ore.-Wash.
|
$1,675
|
11.7%
|
$1,390
|
5.7%
|
$1,623
|
10.8%
|
$1,899
|
16.9%
|
26.4%
|
Providence-Warwick,
R.I.-Mass.
|
$1,800
|
8.8%
|
$1,350
|
-16.0%
|
$1,595
|
7.8%
|
$2,000
|
11.1%
|
4.0%
|
Raleigh,
N.C.
|
$1,442
|
16.4%
|
$1,309
|
11.6%
|
$1,331
|
17.5%
|
$1,610
|
20.0%
|
11.0%
|
Richmond,
Va.
|
$1,272
|
13.6%
|
$1,146
|
19.0%
|
$1,174
|
17.4%
|
$1,401
|
12.5%
|
-2.8%
|
Riverside-San
Bernardino-Ontario, Calif.
|
$2,230
|
29.7%
|
$1,368
|
9.9%
|
$1,841
|
22.7%
|
$2,605
|
39.8%
|
-18.5%
|
Rochester,
N.Y.
|
$1,210
|
9.5%
|
$882
|
8.9%
|
$1,103
|
10.4%
|
$1,350
|
8.9%
|
26.5%
|
Sacramento-Roseville-Arden-Arcade, Calif.
|
$1,890
|
20.9%
|
$1,639
|
12.2%
|
$1,750
|
20.1%
|
$2,000
|
20.8%
|
13.2%
|
San Antonio-New
Braunfels, Texas
|
$1,150
|
9.0%
|
$950
|
4.6%
|
$1,064
|
11.4%
|
$1,324
|
11.7%
|
20.3%
|
San Diego-Carlsbad,
Calif.
|
$2,610
|
21.7%
|
$995
|
7.1%
|
$2,422
|
24.5%
|
$2,950
|
20.4%
|
18.6%
|
San
Francisco-Oakland-Hayward, Calif.
|
$2,865
|
-2.9%
|
$2,080
|
18.5%
|
$2,650
|
-5.2%
|
$3,336
|
-4.7%
|
44.4%
|
San
Jose-Sunnyvale-Santa Clara, Calif.
|
$2,936
|
1.4%
|
$2,305
|
-8.3%
|
$2,750
|
3.3%
|
$3,333
|
1.2%
|
47.5%
|
Seattle-Tacoma-Bellevue, Wash.
|
$1,975
|
5.6%
|
$2,337
|
7.4%
|
$1,990
|
5.0%
|
$2,212
|
4.3%
|
44.2%
|
St. Louis,
Mo.-Ill.
|
$1,155
|
7.4%
|
$1,607
|
2.0%
|
$1,130
|
10.2%
|
$1,229
|
7.7%
|
-29.4%
|
Tampa-St.
Petersburg-Clearwater, Fla.
|
$1,698
|
27.2%
|
$1,520
|
20.7%
|
$1,560
|
30.5%
|
$1,911
|
31.8%
|
-22.9%
|
Virginia
Beach-Norfolk-Newport News, Va.-N.C.
|
$1,330
|
11.9%
|
$1,129
|
3.6%
|
$1,300
|
12.6%
|
$1,439
|
16.4%
|
-19.2%
|
Washington-Arlington-Alexandria,
D.C.-Va.-Md.-W.V.
|
$2,020
|
3.3%
|
$1,634
|
-2.9%
|
$1,929
|
2.1%
|
$2,387
|
7.1%
|
4.3%
|
Methodology
Rental data as of July 2021. Rental units include apartment
communities as well as private rentals (condos, townhomes,
single-family homes). All units were studio, 1-bedroom, or
2-bedroom units. National rents were calculated by averaging the
medians of the 50 largest metropolitan areas.
The monthly cost of buying a home was calculated by averaging
the median listing prices of studio, 1-bed, and 2-bed homes,
weighted by the number of listings, in each housing market.
Memphis for sale data was excluded
while inventory data is under review. Monthly buying costs assume a
5% down payment, with a mortgage rate of 2.87%, and include taxes,
insurance and HOA fees. Typical market-level monthly HOA fees were
included in the overall monthly cost of buying, and the median was
not conditional on the presence of an HOA fee. This means that the
typical HOA fee included reflects both the fees themselves as well
as the prevalence of HOA fees in the cost of local starter homes.
All else equal, areas where more homes have HOA fees will reflect a
higher HOA fee inclusion.
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1 Memphis for sale data was
excluded while inventory data is under review
View original
content:https://www.prnewswire.com/news-releases/realtorcom-july-rental-report-buying-a-starter-home-is-more-affordable-than-renting-in-nearly-half-of-the-biggest-us-metros-301363155.html
SOURCE Realtor.com