SANTA CLARA, Calif.,
Feb. 22, 2022 /PRNewswire/ -- As
housing affordability issues rise across the biggest U.S. markets,
new data suggests many renters who make the transition to
first-time buying could save on monthly payments, according to the
Realtor.com® Monthly Rental Report released today.
In January, the monthly cost of buying a starter
home1 was more affordable than renting a
similar-sized unit in 26 of the 50 largest metros, led by secondary
cities like Birmingham, Ala.,
Cleveland and Pittsburgh.
With buying conditions remaining competitive nationwide,
potential monthly starter home savings are largely attributed to
skyrocketing rents. In January, the U.S. median rental price
increased by double-digits for the eighth straight month, up 19.8%
year-over-year. Compared to growth in the monthly cost of buying a
home with up to two-bedrooms (+11.0% year-over-year), all rental
unit sizes posted higher yearly gains in January: Studios, up 21.0%
($256); 1-bedrooms, up 19.2%
($266); and 2-bedrooms, up 19.2%
($323).
"U.S. rental markets are more than making up for
lost time, with January data showing national rents continued to
surge by double-digits over last year – and at a faster pace than
for-sale home prices. So much faster, in fact, that even as monthly
starter home costs increased in many of the markets that favored
buying, rents for a similar-sized unit were 20% higher," said
Realtor.com® Chief Economist Danielle Hale. "While both rental
and homebuying costs are rising, a number of factors could tip the
affordability scale in favor of first-time buying for many
Americans this year. Rents are forecasted to outpace listing
price growth in 2022 and are already accelerating across all unit
sizes. Additionally, survey data shows the majority of
landlords plan to raise rental asking prices this year. But the
buy-versus-rent decision ultimately depends on personal
circumstances like where you live, your financial situation and how
long you want to live in your next home. As mortgage rates continue
climbing, those looking to buy their first home in 2022 are
more likely to find lower costs now than later in the year, but
home selection is expected to improve as we move toward spring,
when many homeowners target listing their home for sale."
January 2022 Rental Metrics –
National
Unit
Size
|
Median
Rent
|
Change over Jan.
2021
|
Change over Jan.
2020
|
Overall
|
$1,789
|
19.8%
|
21.0%
|
Studio
|
$1,476
|
21.0%
|
14.6%
|
1-bed
|
$1,652
|
19.2%
|
20.2%
|
2-bed
|
$2,000
|
19.2%
|
23.8%
|
Buy Over Rent: First-time buying budgets stretch further in
secondary metros
January data indicates that surging rents are increasingly
driving relative affordability in the starter home buying market,
despite rising listing prices and mortgage rates. More than half of
the 50 largest U.S. metros favored buying in January and the gap
between monthly starter home costs and rents in these areas was
higher than last summer. Many of the top buying markets are
relatively affordable secondary metros that are attracting remote
workers from expensive big tech cities, including first-time buyers
like millennials. Now that downtown offices are reopening, workers
with continued flexibility could be facing relatively less
competition in the top markets that favored starter home buying in
January.
- Across the 50 biggest U.S. metros in January, the median
listing price for a starter home ($295,360) was lower than the median overall
($375,000). However, factoring in
costs like mortgage rates and HOA fees, monthly starter home costs
($1,867) were slightly higher than
rents at the national level ($1,789).
- In 26 of the 50 largest markets, the monthly cost of buying a
starter home was an average of 20.6% ($323) lower than renting one in January.
- On average, the January difference between monthly starter home
costs and rents was even greater in the top 10 markets that favored
buying (-32.6%), led by: Birmingham,
Ala. (-44.3%), Cleveland
(-38.9%), Pittsburgh (-38.3%) and
St. Louis (-37.3%). Two of these
markets – Tampa (+37.5%) and
Orlando (+34.8%) – were among Sun
Belt metros that saw January's fastest annual rent
growth (see table below).
- Illustrating overall declining affordability, both the monthly
cost of buying a starter home and renting one increased in eight of
the top 10 markets that favored buying in January, including
Tampa at No. 9. Even so, as over
one-third (38.1%) of Tampa's recent home shoppers came
to the area from relatively expensive regions like the northeast,
the metro offered lower monthly starter home buying costs
($1,543) than a big tech city like
New York in January ($4,115).
Top 10 Metro Areas that Favor Buying a Starter Home Over Renting
One (Jan. 2022)
Rank
|
Metro
|
% Difference
(Buy-Rent)
|
$ Difference
(Buy-Rent)
|
Buy Cost per
Month
|
Buy
Cost
Y/Y
|
Median Rent per
Month
|
Rent
Y/Y
|
1
|
Birmingham,
Ala.
|
-44.3%
|
-$533
|
$668
|
-5.9%
|
$1,201
|
18.6%
|
2
|
Cleveland,
Ohio
|
-38.9%
|
-$516
|
$809
|
13.5%
|
$1,325
|
9.1%
|
3
|
Pittsburgh,
Penn.
|
-38.3%
|
-$585
|
$945
|
3.2%
|
$1,530
|
18.6%
|
4
|
St. Louis,
Mo.
|
-37.3%
|
-$483
|
$812
|
16.2%
|
$1,295
|
19.5%
|
5
|
Detroit,
Mich.
|
-33.3%
|
-$449
|
$901
|
-10.1%
|
$1,350
|
10.1%
|
6
|
Baltimore,
Md.
|
-30.0%
|
-$531
|
$1,242
|
5.2%
|
$1,773
|
14.4%
|
7
|
Virginia Beach,
Va.
|
-27.2%
|
-$409
|
$1,091
|
14.6%
|
$1,500
|
16.7%
|
8
|
Orlando,
Fla.
|
-27.1%
|
-$493
|
$1,327
|
21.8%
|
$1,820
|
34.8%
|
9
|
Tampa,
Fla.
|
-25.5%
|
-$527
|
$1,543
|
27.3%
|
$2,070
|
37.5%
|
10
|
Louisville,
Ky.
|
-23.7%
|
-$284
|
$916
|
8.5%
|
$1,200
|
17.1%
|
Rent Over Buy: Big tech cities offer relatively affordable
rents and flexibility
Big tech cities, where real estate
typically comes at a premium, dominated January's top
markets that favored renting over buying a starter home. In these
markets, rents have been making a strong comeback from their
2021 slowdown, partly driven by higher rent growth among studios
common to big tech cities than larger units. Still, as first-time
buyers face particularly limited inventory and expensive
asking prices in big tech cities, renting continues to present a
more affordable option. Additionally, for-sale inventory in major
tech hubs typically includes a relatively high share of condos,
which often come with a hefty HOA fee that can drive up monthly
homeownership costs.
- In January, the monthly cost of buying was 24.8% ($536) higher than the cost of renting in 24 of
the 50 largest metros, on average.
- In the top 10 metros that favored renting, eight of which were
among the biggest U.S. tech cities, monthly starter home buying
costs payments were 41.6% ($978)
higher than rents. For-sale starter homes in these top 10 markets
included a higher average share of condos (78%) than the national
rate (55%) and pricier HOA fees (at $494 vs. $278).
- With 76.1% ($1,346) higher
monthly starter home buying costs than rents, Austin, Texas topped the January list of
markets that favored renting (see table below).
- At No. 7, Denver had 34.0%
higher monthly starter home costs in January, despite significant
annual rent growth (+18.7%). With out-of-state home shoppers
accounting for more than one-third (35.6%) of Denver traffic, renting could be a relatively
affordable alternative for transplant first-time buyers still
searching for a home in their budget. January data shows the
Denver rental share of income
(21.7%) is relatively more affordable than in a city like
Los Angeles (45.9%).
"Deciding when to transition from renting to
first-time buying is largely dependent on stage of life. For young
Americans like Gen Z who may have moved home to save money
during COVID, renting in a big tech city offers flexibility and
relative affordability even as rents recover in these areas. But
for the 45 million millennials at the first-time buying stage
of life, priorities may have shifted towards settling down and
building wealth," Hale added. "With mortgage rates
getting higher, living somewhere that offers relatively affordable
for-sale home options is key, as the general rule of thumb is to
not spend more than 30% of your income on housing costs. Renters
considering the transition to buying their first home can get a
better sense of the financial components by using tools like
Realtor.com®'s Rent Vs. Buy
Calculator."
Top 10 Metro Areas that Favor Renting a Starter Home Over Buying
One (Jan. 2022)
Rank
|
Metro
|
% Difference
(Buy-Rent)
|
$ Difference
(Buy-Rent)
|
Buy Cost per
Month
|
Buy
Cost
Y/Y
|
Median Rent per
Month
|
Rent
Y/Y
|
1
|
Austin,
Texas
|
76.1%
|
$1,346
|
$3,115
|
25.7%
|
$1,769
|
31.0%
|
2
|
New York,
N.Y.
|
52.4%
|
$1,415
|
$4,115
|
18.2%
|
$2,700
|
9.1%
|
3
|
San Francisco,
Calif.
|
49.1%
|
$1,461
|
$4,436
|
4.4%
|
$2,975
|
12.0%
|
4
|
San Jose,
Calif.
|
48.3%
|
$1,479
|
$4,541
|
13.4%
|
$3,062
|
14.3%
|
5
|
Seattle,
Wash.
|
39.4%
|
$822
|
$2,908
|
-3.6%
|
$2,086
|
19.5%
|
6
|
Boston,
Mass.
|
37.5%
|
$1,048
|
$3,843
|
17.4%
|
$2,795
|
24.2%
|
7
|
Denver,
Colo.
|
34.0%
|
$645
|
$2,540
|
33.3%
|
$1,895
|
18.7%
|
8
|
Rochester,
N.Y.
|
28.5%
|
$360
|
$1,624
|
-15.0%
|
$1,264
|
10.0%
|
9
|
Portland,
Ore.
|
25.5%
|
$443
|
$2,176
|
13.8%
|
$1,733
|
15.5%
|
10
|
Los Angeles,
Calif.
|
25.5%
|
$760
|
$3,742
|
2.5%
|
$2,982
|
19.5%
|
January 2022 Rental Metrics –
50 Largest U.S. Metros
Metropolitan
Statistical Area
|
Overall Median
Rent
|
Overall
Rent
Y/Y
|
Studio Median
Rent
|
Studio
Rent
Y/Y
|
1-Bed Median
Rent
|
1-Bed
Rent
Y/Y
|
2-Bed Median
Rent
|
2-Bed
Rent
Y/Y
|
Atlanta-Sandy
Springs-Roswell, Ga.
|
$1,814
|
21.7%
|
$1,664
|
22.8%
|
$1,689
|
23.3%
|
$2,003
|
20.8%
|
Austin-Round Rock,
Texas
|
$1,769
|
31.0%
|
$1,485
|
34.9%
|
$1,615
|
31.8%
|
$1,932
|
28.0%
|
Baltimore-Columbia-Towson, Md.
|
$1,773
|
14.4%
|
$1,600
|
28.0%
|
$1,699
|
14.0%
|
$1,873
|
13.5%
|
Birmingham-Hoover,
Ala.
|
$1,201
|
18.6%
|
$1,066
|
3.8%
|
$1,139
|
14.7%
|
$1,261
|
23.0%
|
Boston-Cambridge-Newton, Mass.-N.H.
|
$2,795
|
24.2%
|
$2,527
|
35.1%
|
$2,600
|
23.8%
|
$3,040
|
21.6%
|
Buffalo-Cheektowaga-Niagara Falls, N.Y.
|
$1,365
|
23.3%
|
$1,095
|
36.9%
|
$1,225
|
20.1%
|
$1,490
|
15.1%
|
Charlotte-Concord-Gastonia, N.C.-S.C.
|
$1,619
|
21.8%
|
$1,489
|
24.2%
|
$1,500
|
20.5%
|
$1,755
|
18.3%
|
Chicago-Naperville-Elgin, Ill.-Ind.-Wis.
|
$1,800
|
9.2%
|
$1,350
|
8.0%
|
$1,800
|
13.8%
|
$1,995
|
5.0%
|
Cincinnati,
Ohio-Ky.-Ind.
|
$1,395
|
13.3%
|
$1,130
|
12.8%
|
$1,350
|
16.2%
|
$1,549
|
15.6%
|
Cleveland-Elyria,
Ohio
|
$1,325
|
9.1%
|
$946
|
15.8%
|
$1,275
|
11.4%
|
$1,450
|
8.2%
|
Columbus,
Ohio
|
$1,249
|
16.1%
|
$1,009
|
12.7%
|
$1,150
|
15.6%
|
$1,375
|
18.0%
|
Dallas-Fort
Worth-Arlington, Texas
|
$1,615
|
24.9%
|
$1,376
|
26.4%
|
$1,479
|
27.4%
|
$1,900
|
25.1%
|
Denver-Aurora-Lakewood, Colo.
|
$1,895
|
18.7%
|
$1,604
|
18.1%
|
$1,778
|
19.7%
|
$2,178
|
18.5%
|
Detroit-Warren-Dearborn, Mich.
|
$1,350
|
10.1%
|
$1,075
|
8.6%
|
$1,150
|
12.4%
|
$1,499
|
11.4%
|
Hartford-West
Hartford-East Hartford, Conn.
|
$1,673
|
16.6%
|
$1,412
|
31.0%
|
$1,500
|
10.4%
|
$1,900
|
18.8%
|
Houston-The
Woodlands-Sugar Land, Texas
|
$1,399
|
16.1%
|
$1,265
|
14.6%
|
$1,274
|
16.8%
|
$1,583
|
17.3%
|
Indianapolis-Carmel-Anderson, Ind.
|
$1,204
|
13.2%
|
$1,032
|
14.7%
|
$1,094
|
8.2%
|
$1,355
|
16.4%
|
Jacksonville,
Fla.
|
$1,612
|
32.1%
|
$1,390
|
68.5%
|
$1,498
|
30.9%
|
$1,749
|
34.5%
|
Kansas City,
Mo.-Kan.
|
$1,220
|
13.6%
|
$995
|
11.2%
|
$1,090
|
14.7%
|
$1,435
|
13.1%
|
Las
Vegas-Henderson-Paradise, Nev.
|
$1,644
|
30.0%
|
$1,223
|
22.9%
|
$1,510
|
31.3%
|
$1,750
|
29.6%
|
Los Angeles-Long
Beach-Anaheim, Calif.
|
$2,982
|
19.5%
|
$2,250
|
23.3%
|
$2,706
|
21.9%
|
$3,450
|
17.1%
|
Louisville/Jefferson
County, Ky.-Ind.
|
$1,200
|
17.1%
|
$1,000
|
8.1%
|
$1,100
|
11.7%
|
$1,379
|
22.6%
|
Memphis,
Tenn.-Miss.-Ark.
|
$1,385
|
26.5%
|
$1,126
|
15.1%
|
$1,349
|
25.7%
|
$1,499
|
30.7%
|
Miami-Fort
Lauderdale-West Palm Beach, Fla.
|
$2,895
|
52.4%
|
$2,374
|
50.7%
|
$2,555
|
50.3%
|
$3,292
|
49.6%
|
Milwaukee-Waukesha-West Allis, Wis.
|
$1,545
|
12.6%
|
$1,195
|
7.7%
|
$1,420
|
9.7%
|
$1,795
|
15.8%
|
Minneapolis-St.
Paul-Bloomington, Minn.-Wis.
|
$1,555
|
7.2%
|
$1,211
|
4.4%
|
$1,465
|
5.8%
|
$1,899
|
9.8%
|
Nashville-Davidson--Murfreesboro--Franklin,
Tenn.
|
$1,685
|
24.4%
|
$1,630
|
20.3%
|
$1,595
|
24.2%
|
$1,799
|
25.3%
|
New Orleans-Metairie,
La.
|
$1,763
|
17.5%
|
$1,215
|
-2.8%
|
$1,530
|
6.6%
|
$2,000
|
11.4%
|
New
York-Newark-Jersey City, N.Y.-N.J.-Pa.
|
$2,700
|
9.1%
|
$2,432
|
21.6%
|
$2,485
|
6.3%
|
$2,980
|
5.7%
|
Oklahoma City,
Okla.
|
$923
|
11.2%
|
$800
|
16.8%
|
$865
|
14.0%
|
$995
|
11.2%
|
Orlando-Kissimmee-Sanford, Fla.
|
$1,820
|
34.8%
|
$1,585
|
24.0%
|
$1,690
|
35.2%
|
$2,070
|
44.3%
|
Philadelphia-Camden-Wilmington,
Pa.-N.J.-Del.-Md.
|
$1,771
|
11.0%
|
$1,440
|
14.7%
|
$1,695
|
9.7%
|
$1,975
|
9.7%
|
Phoenix-Mesa-Scottsdale, Ariz.
|
$1,855
|
27.1%
|
$1,350
|
28.7%
|
$1,610
|
26.8%
|
$2,170
|
26.7%
|
Pittsburgh,
Pa.
|
$1,530
|
18.6%
|
$1,273
|
21.2%
|
$1,511
|
22.0%
|
$1,630
|
14.4%
|
Portland-Vancouver-Hillsboro, Ore.-Wash.
|
$1,733
|
15.5%
|
$1,425
|
13.1%
|
$1,675
|
15.2%
|
$1,972
|
15.3%
|
Providence-Warwick,
R.I.-Mass.
|
$2,005
|
17.9%
|
$1,700
|
30.8%
|
$1,705
|
10.4%
|
$2,200
|
18.9%
|
Raleigh,
N.C.
|
$1,545
|
23.6%
|
$1,415
|
22.1%
|
$1,425
|
26.1%
|
$1,710
|
24.4%
|
Richmond,
Va.
|
$1,427
|
16.7%
|
$1,195
|
21.3%
|
$1,311
|
17.1%
|
$1,549
|
16.5%
|
Riverside-San
Bernardino-Ontario, Calif.
|
$2,618
|
25.2%
|
$1,520
|
12.6%
|
$2,185
|
25.2%
|
$2,845
|
22.0%
|
Rochester,
N.Y.
|
$1,264
|
10.0%
|
$915
|
1.7%
|
$1,155
|
9.5%
|
$1,395
|
12.0%
|
Sacramento--Roseville--Arden-Arcade,
Calif.
|
$2,064
|
21.6%
|
$1,939
|
22.6%
|
$1,949
|
21.6%
|
$2,195
|
19.4%
|
San Antonio-New
Braunfels, Texas
|
$1,377
|
25.2%
|
$1,212
|
22.5%
|
$1,251
|
24.9%
|
$1,550
|
24.0%
|
San Diego-Carlsbad,
Calif.
|
$3,025
|
31.5%
|
$2,389
|
28.9%
|
$2,750
|
29.1%
|
$3,395
|
30.7%
|
San
Francisco-Oakland-Hayward, Calif.
|
$2,975
|
12.0%
|
$2,415
|
18.2%
|
$2,796
|
13.8%
|
$3,495
|
11.7%
|
San
Jose-Sunnyvale-Santa Clara, Calif.
|
$3,062
|
14.3%
|
$2,466
|
23.3%
|
$2,834
|
15.7%
|
$3,475
|
14.0%
|
Seattle-Tacoma-Bellevue, Wash.
|
$2,086
|
19.5%
|
$1,720
|
25.5%
|
$2,070
|
21.8%
|
$2,456
|
17.0%
|
St. Louis,
Mo.-Ill.
|
$1,295
|
15.6%
|
$995
|
10.7%
|
$1,235
|
15.9%
|
$1,404
|
14.6%
|
Tampa-St.
Petersburg-Clearwater, Fla.
|
$2,070
|
37.5%
|
$1,925
|
34.1%
|
$1,891
|
40.5%
|
$2,300
|
36.7%
|
Virginia
Beach-Norfolk-Newport News, Va.-N.C.
|
$1,500
|
16.7%
|
$1,250
|
14.7%
|
$1,410
|
13.7%
|
$1,595
|
16.0%
|
Washington-Arlington-Alexandria, DC-Va.-Md.-W.
Va.
|
$2,085
|
12.7%
|
$1,713
|
14.1%
|
$1,985
|
11.8%
|
$2,444
|
12.3%
|
Methodology
Rental data as of January 2022 for units advertised as for-rent on
Realtor.com®. Rental units include apartment communities
as well as private rentals (condos, townhomes, single-family
homes). All units were studio, 1-bedroom, or 2-bedroom units. We
use communities that reliably report data each month within the top
50 largest metropolitan areas. National rents were calculated by
averaging the medians of the 50 largest metropolitan areas.
The monthly cost of buying a home was calculated by averaging
the median listing prices of studio, 1-bed, and 2-bed homes,
weighted by the number of listings, in each housing market.
Memphis for sale data was excluded
while inventory data is under review. Monthly buying costs assume a
7% down payment, with a mortgage rate of 3.45%, and include taxes,
insurance and HOA fees. Memphis
for sale data was excluded while inventory data is under
review.
Please note: With the release of its January 2022 Rental Report,
Realtor.com® incorporated a new and improved methodology
for capturing and reporting rental listing trends and metrics. As a
result of these changes, this release is not directly comparable
with previous Realtor.com® data releases and reports.
However, future Realtor.com® data releases, including
historical data, will consistently apply the new methodology. See
more details here.
About Realtor.com®
Realtor.com®
makes buying, selling, renting and living in homes easier and more
rewarding for everyone. Realtor.com® pioneered the world
of digital real estate more than 25 years ago, and today through
its website and mobile apps offers a marketplace where people can
learn about their options, trust in the transparency of information
provided to them, and get services and resources that are
personalized to their needs. Using proprietary data science and
machine learning technology, Realtor.com® pairs buyers
and sellers with local agents in their market, helping take the
guesswork out of buying and selling a home. For professionals,
Realtor.com® is a trusted provider of consumer
connections and branding solutions that help them succeed in
today's on-demand world. Realtor.com® is
operated by News Corp [Nasdaq: NWS, NWSA] [ASX: NWS, NWSLV]
subsidiary Move, Inc. For more information, visit
Realtor.com®.
Media Contact
rachel.conner@move.com
1 See methodology below for a detailed breakdown
of monthly starter home buying costs.
View original
content:https://www.prnewswire.com/news-releases/realtorcom-january-rental-report-buying-a-starter-home-is-more-affordable-than-renting-in-over-half-of-the-largest-us-metros-301486118.html
SOURCE Realtor.com