Starter Homes Are More Affordable Than Renting (in Some Places)
Rents are soaring to all-time highs and rising at a record pace which, after doing the math, has made buying a starter home more affordable than renting in 24 of the 50 largest metro markets, analyzed by Realtor.com
Birmingham, AL tops the list of markets that favor buying, where the monthly cost of buying a “starter” home was $728 in July, which was 33.1% less than the monthly rent of $1,089, for a monthly savings of $361. St. Louis, MO; Pittsburgh, PA; Orlando, FL; and Cleveland, OH metro areas round out the top five markets where the cost of buying was lower than the monthly rent.
In the top 10 metros that favored buying over renting in July, monthly payments for starter homes were 24.3% lower than rents, driven in part by lower median listing prices ($192,000) than the national rate ($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 tech cities, where real estate comes at a very high premium, renting costs less than a monthly mortgage payment for buyers. Austin, TX; San Jose, CA; Seattle, WA; San Francisco, CA; Los Angeles, CA; and Boston, MA all top the list of housing markets that favor renting. 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.
For charts that break down the top markets that favor buying over renting and vice versa ...