Rents have skyrocketed over the past year — but renting is still cheaper than buying at entry-level prices in three-quarters of the country, according to a new analysis published by Realtor.com on Thursday.
Why it matters: This is a big change from January, when renting had the advantage in just over half of the markets.
- The difference now is higher mortgage rates, making the median payment for a “starter” home more expensive than for a comparable rental, the analysis says. Home prices haven’t started falling yet, which could level the equation.
The big picture: Whether to rent or own is a timeless conundrum filled with intangible caveats. Some people want to put down roots for the long term. Others don’t want to deal with the hassle (or expense) of maintaining a home or apartment.
- In a real estate boom, when house prices are rising, renting is usually a better choice. But in the pandemic era, with more people all at once looking for more space, both options became more expensive.
- Rent increases appear to be slowing. Average rents rose 14.1% year over year for the fifth straight month — down from a 19% peak in January, according to Realtor.com.
Game Status: Analysis shows that rent is the cheapest in some of the most expensive home markets.
- In Austin, buying a starter home costs 97.8% more than renting — a difference of $1,822. In San Francisco it’s 80% more.
- The analysis considered June asking rents for one- and two-bedroom apartments and large apartment complexes listed on Realtor.com versus a monthly payment for a starter home (up to just two bedrooms), based on June mortgage rates and list prices.