SANTA CLARA, CA — In a trend that persists from earlier this year, renting remains a more affordable option than buying a starter home in all 50 of the largest U.S. metropolitan areas. The July 2024 Realtor.com Rental Report shows that elevated mortgage rates, high home prices, and falling rents have led to over $1,000 in savings per month for renters compared to buyers.
“For every major U.S. metro, renting a starter home continues to be more affordable than buying a starter home, continuing a trend we saw this February as rents declined and home prices continued to grow,” said Ralph McLaughlin, senior economist at Realtor.com. “However, we are starting to see the advantage of renting over buying decrease across several metros, especially as more affordable inventory hits the market. It has been a challenging time for potential first-time homebuyers, especially as rents have been so favorable, but with mortgage relief finally on the way, we might continue to see the advantage of renting shrink, giving homebuyers a path into their first home.”
Top Metros Favoring Renting
The top 10 metros where renting offers the most significant savings over buying are:
- Austin-Round Rock-Georgetown, TX – Buying costs 144.4% more than renting, leading to a $2,120 monthly rent saving.
- Seattle-Tacoma-Bellevue, WA – Renting saves $2,222 monthly.
- Los Angeles-Long Beach-Anaheim, CA – Monthly rent saves $2,784.
- Nashville-Davidson-Murfreesboro-Franklin, TN – Renting saves $1,399 monthly.
- Phoenix-Mesa-Chandler, AZ – Monthly rent saves $1,396.
- Columbus, OH – Renting saves $1,090 monthly.
- Dallas-Fort Worth-Arlington, TX – Monthly rent saves $1,307.
- San Francisco-Oakland-Berkeley, CA – Renting saves $2,442 monthly.
- New York-New Jersey-Jersey City, NY-NJ-PA – Monthly rent saves $2,342.
- Boston-Cambridge-Newton, MA – Renting saves $2,336 monthly.
Renting vs. Buying: The Broader Picture
In July 2024, the cost of buying a starter home in the top 50 metros was 61.3% higher than renting, translating to a $1,067 monthly difference. This is an increase from last July, when only 47 metros favored renting over buying. Memphis, TN; Birmingham, AL; and Pittsburgh, PA were the three metros that shifted from buy-favoring to rent-favoring markets over the past year.
Changes in Renting Advantage
While renting remains more affordable, the advantage has shrunk in some areas. In the past year, 23 of the top 50 markets saw a diminishing rent advantage. San Francisco, San Jose, Denver, Washington, D.C., and Miami experienced the most significant declines in the rent advantage, primarily due to falling home prices in these markets.
Conversely, some metros have seen an increasing advantage in renting over the past year. Memphis and Birmingham became more rent-favoring, with Memphis seeing the largest increase in rent advantage, saving an additional $246 monthly compared to last year.
Conclusion
The ongoing trend of renting being more affordable than buying highlights the financial pressures many potential homebuyers face. Although the advantage of renting has decreased in some areas, renting remains the more economical choice in all 50 of the largest U.S. metros. As the housing market evolves, monitoring these trends will be crucial for understanding the broader implications for potential homeowners and the real estate sector.
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