Rents recently hit their highest level in two years. Now, according to a new report, rents have soared so much that buying a home to start is more affordable than renting in many US cities. This data comes from Realtor.com, which found that median rents were up 9.8% from last year, or $ 143 per month on average.
In 24 of the country’s largest markets, the jump was enough to push rents beyond the typical price of a starting home. According to the report, the monthly cost of a small home starting out is $ 216 (or 15.5%) less than renting.
This is great news for homeowners, who just a few months ago were facing double-digit rent cuts amid a pandemic. Fortunately, those days are now clearly in the rearview mirror.
Where have rents recovered the most? And where is buying a house much more affordable? Let’s look at the market-level data to find out.
Where houses are more affordable than rents
According to Realtor.com, the median price for a starting two-bedroom home is $ 297,000, and the monthly cost of these homes has jumped 5.5% since 2020. Despite this bump, they’re still not enough. to compete with rising rents, which has gone up. nearly 10% over the same period.
“On average, rent growth has exceeded the monthly cost of buying a home. Despite the rapid rise in house prices, historically low mortgage rates have kept monthly costs under control,” the report said.
The gap is most pronounced in Birmingham, Alabama, where a starting home costs just $ 728 per month. Rents? They represent $ 1,089, or about 33% more.
Other cities where buying is more affordable than renting include St. Louis (a 29.4% difference), Pittsburgh (27.7%), Cleveland (25.7%), Baltimore (20.5%) and Orlando (25.9%) and Tampa (22.9%), both in Florida. On average, the top 10 cities showed a 24% gap between buying and renting.
Where rental wins
In well-known tech hubs, rental still appears to be more affordable, according to the data. In Austin, Texas, for example, starting homes are virtually impossible to find. Those listed stand at around $ 431,000, a 17.7% jump from last year’s prices.
The typical starter house costs just under $ 2,800 per month – and compared to renting, it’s 79.2% more expensive.
Tech cities and high-priced housing markets – like Seattle, Boston, New York, San Francisco, Los Angeles, and San Jose, Calif. – have also favored renting over buying. In San José, the gap was 47.5%, while in San Francisco it was 44.4%.
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Clearly, rental prices have come back from the dead. Add to that the recent Supreme Court removal of the Centers for Disease Control and Prevention’s eviction ban, and the good news continues to roll for homeowners.
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