Buying starter home is cheaper than renting in many US cities: Report
Birmingham, Cleveland and St. Louis among cities with ‘most affordable’ starter homes, says Realtor.com
In the U.S., buying a starter home is more affordable than renting in many large cities.
Research analysts at Realtor.com examined home buying and rental data in 50 of the largest metro areas in the country and found that buying a starter home was a more cost-effective move in 26 metros, when comparing similarly-sized units.
As of January, the national median monthly rental cost for a starter home was $1,789 – which is a 19.8% change from the previous year.
VIRAL TIKTOK VIDEO MAKES FUN OF COMPETITIVE HOME BUYING IN THE CURRENT MARKET
When the starter homes were broken down into studios, one-bedroom and two-bedroom units, the median rent costs were $1,476, $1,652 and $2,000, respectively.
The top 10 metros where buying a starter home was more affordable than renting were Birmingham, Alabama; Cleveland, Ohio; Pittsburgh, Pennsylvania; St. Louis, Missouri; Detroit, Michigan; Baltimore, Maryland.; Virginia Beach, Virginia; Orlando, Florida; Tampa, Florida; and Louisville, Kentucky.
None of these metros had a median monthly buy cost that exceeded $1,550. Birmingham leads the pack as the most affordable with a median buy cost of $668 per month.
"With buying conditions remaining competitive nationwide, potential monthly starter home savings are largely attributed to skyrocketing rents," Realtor.com wrote in a press release that discussed its Monthly Rent Report.
OFFER STRATEGIES HOME BUYERS SHOULD TRY TO WIN THE BID: REAL ESTATE AGENTS
U.S. metros where rents have jumped more than 25% in the last year, according to Realtor.com, include Miami-Fort Lauderdale-West Palm Beach, Florida; Tampa-St. Petersburg-Clearwater, Florida; Orlando-Kissimmee-Sanford, Florida; Jacksonville, Florida; San Diego-Carlsbad, California; Austin-Round Rock, Texas; Las Vegas-Henderson-Paradise, Nevada; Phoenix-Mesa-Scottsdale, Arizona; Memphis, Tennessee; and Riverside-San Bernardino-Ontario, California.
"U.S. rental markets are more than making up for lost time, with January data showing national rents continued to surge by double-digits over last year – and at a faster pace than for-sale home prices," said Realtor.com’s chief economist Danielle Hale, in a statement.
She continued, "While both rental and homebuying costs are rising, a number of factors could tip the affordability scale in favor of first-time buying for many Americans this year. Rents are forecasted to outpace listing price growth in 2022 and are already accelerating across all unit sizes. Additionally, survey data shows the majority of landlords plan to raise rental asking prices this year."
6 IN 10 MILLENNIALS HAVE HOMEBUYER’S REMORSE ABOUT THEIR FIRST HOUSE
Ultimately, Hale said that "the buy-versus-rent decision" depends on a household’s overall financial situation or desire to stay in one area for an extended period.
"As mortgage rates continue climbing, those looking to buy their first home in 2022 are more likely to find lower costs now than later in the year," Hale added. "But home selection is expected to improve as we move toward spring, when many homeowners target listing their home for sale."
For families who favor renting or wish to live in a densely populated metro, Realtor.com also narrowed down which cities favor renting over buying.
GET FOX BUSINESS ON THE GO BY CLICKING HERE
The top 10 metros where renting a starter home was more affordable than buying were Austin, Texas; New York, New York; San Francisco, California; San Jose, California; Seattle, Washington; Boston, Massachusetts; Denver, Colorado; Rochester, New York; Portland, Oregon; and Los Angeles, California.
None of these metros had a median monthly rent cost that exceeded $3,065. Rochester was the most affordable with a median rent cost of $1,264 per month while San Jose was the priciest out of the top 10 with a median rent cost of $3,062 per month. On the buy-side, starter homes in Rochester had a median monthly cost of $1,624 while San Jose had a median monthly cost of $4,541.
CLICK HERE TO READ MORE ON FOX BUSINESS
To see Realtor.com’s full Monthly Rental Report, you can visit the real estate website’s research page at. realtor.com/research/january-2022-rent.