The dream of homeownership is becoming increasingly elusive for first-time buyers as surging home prices and high mortgage rates make renting more appealing. In just three of the nation’s 50 largest metropolitan areas—Memphis, Tenn., Pittsburgh, and Birmingham, Ala.—it's more cost-effective to buy than to rent. High mortgage rates, averaging more than 7%, have pushed up homeowners' monthly bills to around $2,860 in August, including property taxes and insurance, while the median monthly rent hovers around $1,750.
For that reason, renters are at the greatest advantage in cities such as Austin, Texas, San Francisco, and Columbus, Ohio, where potential buyers are facing monthly costs over $1,000 higher than renters, according to Realtor.com.
In addition to the effect of the high home purchase cost, rents have come down in the past year, widening the gap between buying and renting, notes Realtor.com economist Jiayi Xu.
“In August 2023, the median asking rent for two-bedroom units dropped -0.7%, marking the fourth consecutive month of annual declines,” Xu wrote in her detailed report on renting versus buying.