Renting a home has become more affordable than buying in every major metropolitan area across the U.S., according to the latest report from Realtor.com.
The February monthly rent report from Realtor.com indicates that the top 50 metro areas — which all happen to be run by Democrats — are experiencing this new trend. Last year’s figures showed that renting was less expensive in 90% of these areas, but a continued surge in property prices has extended this to a full 100%.
Notably, this is the first time such a phenomenon has been recorded since Realtor.com started monitoring the rent versus buy dynamic.
Danielle Hale, the chief economist at Realtor.com, attributed the shift to the ongoing decrease in rental prices combined with the persistent high costs of purchasing a home. The significant factors contributing to the latter include elevated mortgage rates and sustained hikes in home values.
“Renting a home is now a more cost-effective option in all major U.S. markets,” she said in a statement provided to MarketWatch.
Although home ownership is traditionally viewed as an asset that contributes to wealth accumulation over time, the disparity between soaring home prices and rents has put the dream out of reach for many Americans. The cost of borrowing has escalated, and when pitted against the rental market, the scale tips in favor of leasing.
To illustrate, the median monthly rent in the New York–Newark–Jersey City metro area stands at $2,852, compared to the substantially higher monthly mortgage payment of $4,995. The calculations by Realtor.com take into consideration median listing prices across various home types, along with an assumed down payment of 8% at the current mortgage rate of 6.78%.
The widest gap noted was in the Austin–Round Rock–Georgetown area of Texas. Here, the median rent was recorded at $1,530 per month, substantially less than the $3,695 for a monthly mortgage payment on a home. This equates to buying being 142% more expensive than renting in that area.
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