SANTA CLARA, Calif. – (By Dale King, Realty News Report) – With rents continuing to decline through July, renting a home in one of the nation’s 50 largest metropolitan areas is considered a better financial solution than buying an apartment – at least for now, according to a just-released rent report from real estate marketplace Realtor.com.
The document says that those looking to get the best deal should head to the No. 1 metro area on the list, Austin, or the surrounding cities of Round Rock and Georgetown. There, the monthly cost of buying a home is about $3,558, or 144.4 percent more than the $1,468 monthly rent for a rental property. That’s a significant savings of $2,120 per month.
The capital isn’t the only bargain among the top metropolitan areas where you can save the most by renting versus buying. In the Dallas-Fort Worth-Arlington metropolitan area, the average monthly rent was $1,481, while buying a home cost $2,788 per month – a difference of $1,307 (88.3 percent per month).
While some other Texas metropolitan areas didn’t make the top 10, they offered tempting prices for those looking to rent a home. In the Houston-The Woodlands-Sugar Land MSA, the average monthly rent was $1,402, while the cost of a home was $2,442 per month. That’s a difference of $1,040 per month, or 74.2 percent, according to Realtor.com’s analysis.
To rent an entry-level home in the San Antonio-New Braunfels area, a renter would have to shell out $1,232 a month for a median-priced home, according to the report. Purchasing an entry-level home would cost $2,035 a month – a difference of $803 a month, or 65.2 percent, in out-of-pocket spending.
Other top markets in the U.S. that tended to rent rather than buy included Seattle, Los Angeles, San Francisco, New York and Columbus, Ohio. Thanks to affordable rental prices, these regions landed in the top 10 cheapest metropolitan areas, according to the report.
“In every major U.S. metropolitan area, renting a home remains cheaper than buying, continuing a trend we saw in February of this year, when higher mortgage rates, high home prices and falling rents helped save more than $1,000 by renting versus buying,” said Ralph McLaughlin, senior economist at Realtor.com.
But the tide could be turning, he noted. “We’re seeing the advantage of renting over buying erode in several metropolitan areas, particularly as more affordable options come onto the market,” the economist noted. “It’s been a difficult time for prospective first-time homebuyers, particularly because rents have been so cheap. But with mortgage payment relief finally on the horizon, we could continue to see the advantage of renting erode, putting homebuyers on the path to their first home.” .
Compared to last year, the current rental advantage has shrunk by two percentage points, the report says, “due to a larger influx of smaller and more affordable homes for sale, which has led to a slight decline in asking prices for entry-level homes.”
In July 2023, the average monthly cost of buying a home in the 50 largest metros was 63.3 percent higher than renting, the report said. This July, the cost of buying a home is 61.3 percent higher than a purchase transaction – still higher than renting, but the gap is closing – albeit slowly.
Although the overall advantage of renting in the 50 largest metropolitan areas has decreased by 2 percentage points, or $42, compared to last year, it is still $758 higher than it was five years ago (before the pandemic).
Over the past year, 23 of the 50 largest markets have seen a shrinking rental advantage, with the advantage shrinking most in San Francisco, California, San Jose, California, Denver, Colorado, Washington, DC, and Miami, Florida.
“It’s no surprise,” says McLaughlin, “that the rental advantage is eroding the most in these metropolitan areas, as real estate prices in these markets are declining sharply every year.”
August 20, 2024 Real Estate News Report Copyright 2024
Photo credit: Ralph Bivins, Realty News Report Copyright 2024
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