Renting is a better bet in markets across the US
US median rent is only $50 less than its peak in August 2022
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Renting has become the more affordable option in metros across the U.S. as mortgage rates and home prices remain elevated, according to a new report from Realtor.com.
The data showed that the monthly cost for a starter home in the largest 50 metros was roughly 60%, about $1,027, more than the monthly rent in those same markets on average.
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Realtor.com chief economist Danielle Hale noted that the falling cost of rent is also contributing to why it has become the more favorable option in all 50 metros tracked by the agency.
For instance, the U.S. median rent in February declined year over year for the seventh month in a row. Prices dipped 0.4% for studios, one-bedroom and two-bedroom properties across the metros, which was similar to the 0.3% drop in January 2024.
A "for rent" sign is posted in front of a home on Dec. 12, 2023 in Miami. (Joe Raedle/Getty Images / Getty Images)
Still, prices are still significantly higher compared to pre-pandemic times. Even with the monthly declines, the U.S. median rent is only $50 less than its peak in August 2022. It is also still 17.3% higher, or $252 more, than the same period in 2020, according to Realtor.com's most recent data.
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The median rent for two bedrooms nationwide was $1,889. That is $65 lower than the peak seen in August 2022.
"Deciding whether to rent or buy often goes beyond a financial advantage though, and likely depends on a consumer’s circumstances," Hale said. "Renters often prize flexibility while the biggest reasons homebuyers cite are that they want a place of their own and to be closer to family and friends."
A "for rent" sign in front of a home on July 12, 2023 in Miami. (Joe Raedle/Getty Images / Getty Images)
The issue with renting being the more favorable option, though, is that "it does not bring the benefit of housing wealth gains over time that owning does," Hale continued. She said that this is something people should consider when thinking about their long-term housing plans.
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The top 10 metros with the largest rent savings when compared to buying:
- Austin-Round Rock-Georgetown, Texas – $2,165 monthly rent savings (141.5% difference)
- Seattle-Tacoma-Bellevue, Washington – $2,422 (121.1%)
- Phoenix-Mesa-Chandler, Arizona – $1,528 (99%)
- San Francisco-Oakland-Berkeley, California – $2,689 (95.5%)
- Los Angeles-Long Beach-Anaheim, California – $2,539 (89.7%)
- San Jose-Sunnyvale-Santa Clara, California – $2,780 (86.7%)
- Nashville-Davidson-Murfreesboro-Franklin, Tennessee – $1,366 (86%)
- Portland-Vancouver-Hillsboro, Oregon/Washington – $1,396 (84.4%)
- Sacramento-Roseville-Folsom, California – $1,514 (82.1%)
- Houston-The Woodlands-Sugar Land, Texas – $1,103 (80%)