According to a new buy-and-rent analysis, despite double-digit home prices and record lows in home sales, home purchases are getting cheaper in more and more major U.S. cities. The study compared the monthly purchase price with the average price in each of the first 50 markets in January 2021 with the average rental price of a two- or four-bedroom apartment and found that the purchase price was the same or lower in 15 markets. The 50 largest metropolitan areas in the country have grown from 13 a year ago. Additionally, nine other markets support purchases within the 5% range: Atlanta, Orlando, Florida, Birmingham, Alabama, Phoenix, Buffalo, New York, Memphis, Tennessee, Washington, DC.; Las Vegas and Milwaukee.
Looking At The Top Metros
In the top 10 metros where buying is preferred over renting — Cleveland, Chicago, Pittsburgh, Riverside, Calif., Miami, New Orleans, Baltimore, Tampa, Fla., Hartford, Conn., and Detroit — the median listing price of a home averaged 7.7% lower than January’s national median listing price of $346,000, while rents were 0.7% greater than the top-50 average. Monthly costs of buying in these areas decreased by 0.2% compared to the previous year, while rents rose 4.9% during that same period. In the end, buyers in these areas could achieve as much as 11% of their monthly costs compared to renting. According to Danielle Hale, Chief Economist at Realtor.com, there is no such thing as one-size-fits-all when determining whether buying a home or renting is more meaningful. But for the millennials who are considering buying, this is an encouraging development. The coming months will see an increase in interest rates, so buyers either need to act early to take advantage of the current availability or make adjustments to their desired purchase price. With interest rates at historically low levels despite double-digit increases in home prices, the monthly purchase price of an average home in the United States increased only 0.2% year-over-year to $ 1988. The Rent increased 2.4% to US$ 1,727.Among the 50 largest markets, there is almost no difference between the monthly home rent and the cost of ownership in the 14 markets. Cities in the Midwest and South prefer to shop.
On the other hand, the market is dominated by western cities, where renting a home is cheaper than owning a home. This is because house prices in the west are the highest in the country. California occupies the top four spots where rents in San Jose, Los Angeles, San Francisco, and San Diego are higher than ownership. Rounding out the top 10 are Salt Lake City; Portland, Oregon; Providence, Rhode Island; Seattle; Sacramento, California; and Denver (New York is pretty much the same as Denver). Unsurprisingly, homeownership is cheaper than Rent in regions where homeownership is higher than the national average.
What The Numbers Say
According to the United States Census, the national homeownership rate in the third quarter of last year was 64.8%. In areas that are beneficial to buyers, this ratio is 65.6%. The proportion of vacant apartments in these areas is also higher than the national average. The homeownership rate in Los Angeles is less than 50%, while the homeownership rate in Nashville, Tennessee, is about 72%. As working from home becomes a more viable option for many people, rents in the nation’s most prominent tech hub have plummeted in recent months as residents choose to move out of the city center in search of more affordable options elsewhere. This trend has widened the rent-to-own gap in tech hubs like San Jose, Sacramento, Seattle, and Los Angeles, California. Compared to buyers, those who prefer to rent save an average of 30% per month.