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“For what you pay in rent for that urban studio, you could have a whole five-bedroom house in…”
The question on whether to rent or buy is dependent on many factors other than the pay check one shells out every month for housing — one’s city and even neighborhood, plans for the future and family status all weigh heavily on the question that has been causing heated debates for generations.
The given state of real estate market also plays no small part in whether one is better off buying or renting for a while longer. For the last decade, skyrocketing home price growth has put many popular cities completely out-of-reach both for locals and those who want to move there for self-fulfillment or career opportunities.
A median income of $38,854 and a median home price of $385,000 means that the average resident of Newark, New Jersey would need to put away 77.52% of their income on a mortgage while that number is at 85.34% and 82.47% for LA and New York.
These Are The Cities That Want You To Buy There
But as shown by a recent analysis from Realtor.com, the ebbs of the real estate market have created a situation in which the post-pandemic boon in demand has started to fizzle out and lower rental prices. While renting is more affordable than owning in 45 out of the country’s 50 largest cities, there are five metros where mortgage payments and fees are lower than rental payments.
In Tennessee’s Memphis, a median monthly rental costs $1,258 while a median mortgage will set one back only $847. The gap is slightly less extreme but in Pittsburgh, Pennsylvania renting costs $1,445 while the monthly median cost is $1,097.
Alabama’s Birmingham, Missouri’s St. Louis and Maryland’s Baltimore all have higher rental than mortgage prices for a variety of reasons — some lack prospects for long-terms residents while others are have been on a mission to boost homeownership in recent months.
“They’re building like crazy, but they rent for a lot of money,” local broker Joe Sparks told Realtor.com of Memphis. “[About] $1,600 a month for a two-bedroom apartment isn’t out of the ordinary.”
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And A Few Cities That Will Leave Most Renting Forever
By contrast, the Texas city of Austin is by far the most unaffordable in the nation when it comes to owning. While median monthly rent was $1,659 in December, a mortgage and accompanying fees will set one back a whopping $3,672.
As the city continued to attract large numbers of high-earning professionals at the height of the pandemic, home prices were at one point up by more than 40%. Right now, the median mortgage price is approximately $1,000 more expensive per month than what would have paid last year.
San Francisco, Seattle, Boston and Oregon’s Portland all topped the list when it came to cities where renting is significantly cheaper than owning — in the latter, the difference is between a $1,750 monthly rental and a $2,996 monthly mortgage.
“The areas where renting is better tend to be pricey markets for both renters and homebuyers, but especially homebuyers,” Realtor.com Chief Economist Danielle Hale said in a statement. “These in-demand markets tend to be larger cities with a good share of the workforce powered by the tech industry, which has until very recently been a huge growth engine for these markets’ economies and housing.”
SEE THE FULL LIST OF CITIES OF WHERE BUYING IS CHEAPER THAN RENTING HERE.
