Even as the U.S. median rental price hit a new high of
$1,876 in June, climbing mortgage
rates drove monthly starter homeownership costs 29.9% ($561) higher than rents
SANTA
CLARA, Calif., July 21,
2022 /PRNewswire/ -- New data illustrates how higher
mortgage rates are increasingly tipping the housing affordability
scale in favor of renting over first-time buying. Nationally, the
gap between monthly starter homeownership
costs1 and rents widened by 25.5 percentage points
(+$483) from January to June, according to the
Realtor.com® Monthly Rental Report released today.
Additionally, more than three-quarters of the 50 largest U.S.
metros favored renting in June, compared to just under half of
these markets in January.
"With rents and for-sale home prices both hitting
record-highs in June, the rising cost of financing a home purchase
stands out as the clear driver of rental affordability relative to
typical starter homeownership costs. In fact, our analysis shows
that if not for higher mortgage rates, the rent versus first-time
buying gap would have shrunk in the first half of this year, as
rents grew more quickly than starter home prices," said
Realtor.com® Chief Economist Danielle Hale. "While more markets offered
relative rental affordability in June than in January, rents are
still rising across the country. Plus, many of the areas that
favored renting are among the biggest tech cities, where real
estate tends to come at a premium. As housing affordability remains
a challenge for many Americans, it's key to stay on top of how
higher costs impact your budget, whether renting or first-time
buying."
June 2022 Rental Metrics –
National
Unit
Size
|
Median
Rent
|
Change over
June 2021
|
Change over
June 2020
|
Overall
|
$1,876
|
14.1 %
|
23.9 %
|
Studio
|
$1,544
|
15.1 %
|
19.3 %
|
1-bed
|
$1,738
|
13.8 %
|
22.9 %
|
2-bed
|
$2,104
|
13.6 %
|
25.6 %
|
Nationally, rents hit 16th
straight record-high but lag first-time buying costs
The U.S. median rental price hit a new high for the 16th
consecutive month in June, but still lagged behind typical starter
homeownership costs, and by a greater amount than at the start of
the year. This growth is largely attributed to the skyrocketing
cost of financing a home purchase, with mortgage rates jumping more
than two percentage points from January to June. Although for-sale
home prices also hit multiple record-highs in the first half of the
year, Realtor.com®'s June analysis found that mortgage
rate hikes were the biggest driver of the widening affordability
gap between renting and first-time buying.
- In June, the U.S. median rental price hit a new high of
$1,876, rising 14.1% year-over-year
in the fifth consecutive month of moderation from January's peak
(+17.3%). However, overall rents remained 27.6% higher than in 2020
and all unit sizes posted double-digit annual gains: Studios, up
15.1%; one-bedrooms, up 13.8%; and two-bedrooms, up 13.6%.
- Nationally, monthly starter homeownership costs were an average
of 29.9% ($561) higher than rents in
June, up from 4.4% ($78) in January.
In 2021, the monthly cost to buy was $1,815, just $171
higher than rents nationwide.
- Higher mortgage rates were the biggest driver of the widening
year-over-year gap between first-time buying and renting, adding
$416 to typical monthly starter home
costs in June. Comparatively, national starter home listing price
growth (+10.4% year-over-year to a median of $332,619) has only added $162 to first-time buying costs since
June 2021, while rent increases
shrunk the gap by $232.
In the largest metros,
affordability increasingly favors renting over first-time
buying
In June, a significantly greater share of the 50 largest U.S.
metros favored renting over buying than at the start of the year.
Among key factors driving this shift were trends seen nationwide,
such as higher mortgage rates and cooling rent growth. June data
also points to a correlation with economic indicators like
inflation and unemployment, which were relatively lower in many of
the metros with smaller gaps between monthly rents and first-time
buying costs. Additionally, the top rent-favoring markets were
dominated by the country's biggest tech hubs, while the metros that
favored starter homeownership were concentrated in the midwest and
south.
- Of the 50 largest U.S. metros, 38 offered lower rents than
monthly starter homeownership costs in June, compared to 24 markets
in January.
- The country's biggest tech cities accounted for eight of June's
top 10 metros that favored renting over buying, led by Austin, Texas where the monthly starter
homeownership cost was 97.8% ($1,822)
higher than the median rental price. In all of the top 10, renting
was at least 52% more affordable than first-time buying (see table
below).
- Eleven metros favored first-time buying over renting in June
(see table below), including just one metro that flipped from
favoring renting in January: Cincinnati, with monthly starter home costs
that were 0.9 percentage points lower (-$14) than rents in June.
"Whether you're looking for a rental or trying to buy your first
home, our analysis highlights the importance of prioritization when
deciding where to live," said Joel
Berner, Senior Economic Research Analyst for
Realtor.com®. "Take the example of areas with smaller
gaps between rents and monthly starter homeownership costs, which
may still offer relatively affordable starter homeownership costs.
Many of these metros are also attracting home shoppers from
out-of-state, in turn driving up the overall cost of living. For
first-time buyers prioritizing lower home prices, you may still
find options in these areas, but make sure to account for higher
costs of other expenses in your budget."
June 2022 Rental Metrics – Top
Metros by Affordability of Renting vs. Starter Homeownership
Top 10 Metros
Favoring Renting
|
|
Top 10 Metros
Favoring Starter Homeownership
|
Metro
Area
|
Monthly Cost
Difference, Buy-Rent
|
|
Metro
Area
|
Monthly
Cost
Difference,
Buy-Rent
|
Austin,
Texas
|
97.8 %($1,822)
|
|
Pittsburgh,
Penn.
|
-33.0%
(-$522)
|
San Francisco,
Calif.
|
79.9 %($2,535)
|
|
Birmingham,
Ala.
|
-29.5%
(-$377)
|
Seattle,
Wash.
|
78.3 %($1,801)
|
|
St. Louis,
Mo.
|
-20.7%
(-$284)
|
New York,
N.Y.
|
70.0 %($2,092)
|
|
Cleveland,
Ohio
|
-13.8%
(-$198)
|
San Jose,
Calif.
|
65.4 %($2,175)
|
|
Baltimore,
Md.
|
-9.0%
(-$164)
|
Portland,
Ore.
|
61.6 %($1,128)
|
|
Louisville,
Ky.
|
-5.0% (-$63)
|
Los Angeles,
Calif.
|
60.5 %($1,846)
|
|
Virginia Beach,
Va.
|
-3.5% (-$55)
|
Boston,
Mass.
|
57.3 %($1,698)
|
|
Indianapolis,
Ind.
|
-2.8% (-$36)
|
Houston,
Texas
|
53.3 %($773)
|
|
Cincinnati,
Ohio
|
-0.9% (-$14)
|
Phoenix,
Ariz.
|
52.2 %($929)
|
|
Kansas City,
Mo.
|
-0.9% (-$12)
|
June 2022 Rental Metrics – 50
Largest U.S. Metro Areas
Metro
Area
|
Overall Median
Rent
|
Overall Rent
YoY
|
Studio Median
Rent
|
Studio Rent
YoY
|
1-br Median
Rent
|
1-br Rent
YoY
|
2-br Median
Rent
|
2-br Rent
YoY
|
% Difference
(Buy-Rent)
|
$ Difference
(Buy-Rent)
|
Atlanta-Sandy
Springs-Roswell, Ga.
|
$1,858
|
10.8 %
|
$1,718
|
14.6 %
|
$1,731
|
11.4 %
|
$2,065
|
9.4 %
|
13.1 %
|
$243
|
Austin-Round Rock,
Texas
|
$1,864
|
19.6 %
|
$1,534
|
22.8 %
|
$1,720
|
23.5 %
|
$2,050
|
17.0 %
|
97.8 %
|
$1,822
|
Baltimore-Columbia-Towson, Md.
|
$1,820
|
9.6 %
|
$1,451
|
2.6 %
|
$1,716
|
9.2 %
|
$1,940
|
10.2 %
|
-9.0 %
|
-$164
|
Birmingham-Hoover,
Ala.
|
$1,278
|
9.8 %
|
$982
|
-3.8 %
|
$1,186
|
8.5 %
|
$1,343
|
11.5 %
|
-29.5 %
|
-$377
|
Boston-Cambridge-Newton, Mass.-N.H.
|
$2,966
|
23.6 %
|
$2,499
|
24.3 %
|
$2,757
|
19.9 %
|
$3,305
|
25.6 %
|
57.3 %
|
$1,698
|
Buffalo-Cheektowaga-Niagara Falls, N.Y.
|
$1,345
|
10.0 %
|
$1,125
|
2.7 %
|
$1,195
|
8.7 %
|
$1,495
|
8.9 %
|
25.1 %
|
$337
|
Charlotte-Concord-Gastonia, N.C.-S.C.
|
$1,752
|
18.4 %
|
$1,619
|
20.9 %
|
$1,659
|
19.4 %
|
$1,880
|
12.1 %
|
1.3 %
|
$23
|
Chicago-Naperville-Elgin, Ill.-Ind.-Wis.
|
$2,000
|
14.3 %
|
$1,700
|
25.9 %
|
$1,960
|
15.3 %
|
$2,200
|
12.5 %
|
21.4 %
|
$428
|
Cincinnati,
Ohio-Ky.-Ind.
|
$1,499
|
9.1 %
|
$1,200
|
10.6 %
|
$1,438
|
9.3 %
|
$1,626
|
5.8 %
|
-0.9 %
|
-$14
|
Cleveland-Elyria,
Ohio
|
$1,432
|
12.1 %
|
$948
|
6.8 %
|
$1,317
|
8.6 %
|
$1,593
|
16.5 %
|
-13.8 %
|
-$198
|
Columbus,
Ohio
|
$1,310
|
11.2 %
|
$1,089
|
10.6 %
|
$1,235
|
11.5 %
|
$1,412
|
10.8 %
|
37.3 %
|
$489
|
Dallas-Fort
Worth-Arlington, Texas
|
$1,702
|
17.7 %
|
$1,449
|
18.0 %
|
$1,567
|
19.1 %
|
$1,988
|
16.0 %
|
48.3 %
|
$822
|
Denver-Aurora-Lakewood,
Colo.
|
$2,032
|
10.2 %
|
$1,666
|
9.1 %
|
$1,900
|
10.8 %
|
$2,394
|
10.7 %
|
50.4 %
|
$1,025
|
Detroit-Warren-Dearborn, Mich.
|
$1,445
|
9.6 %
|
$1,107
|
11.3 %
|
$1,195
|
6.0 %
|
$1,600
|
9.3 %
|
2.0 %
|
$29
|
Hartford-West
Hartford-East Hartford, Conn.
|
$1,755
|
11.3 %
|
$1,469
|
26.9 %
|
$1,606
|
8.2 %
|
$2,063
|
11.8 %
|
15.0 %
|
$262
|
Houston-The
Woodlands-Sugar Land, Texas
|
$1,450
|
10.2 %
|
$1,356
|
6.7 %
|
$1,333
|
10.5 %
|
$1,627
|
8.5 %
|
53.3 %
|
$773
|
Indianapolis-Carmel-Anderson, Ind.
|
$1,303
|
10.9 %
|
$1,059
|
9.2 %
|
$1,207
|
14.0 %
|
$1,445
|
10.5 %
|
-2.8 %
|
-$36
|
Jacksonville,
Fla.
|
$1,647
|
17.8 %
|
$1,192
|
25.5 %
|
$1,537
|
16.7 %
|
$1,809
|
17.3 %
|
22.3 %
|
$368
|
Kansas City,
Mo.-Kan.
|
$1,326
|
10.2 %
|
$1,024
|
3.8 %
|
$1,252
|
14.3 %
|
$1,533
|
11.2 %
|
-0.9 %
|
-$12
|
Las
Vegas-Henderson-Paradise, Nev.
|
$1,650
|
14.7 %
|
$1,295
|
18.3 %
|
$1,514
|
14.0 %
|
$1,760
|
11.8 %
|
38.7 %
|
$639
|
Los Angeles-Long
Beach-Anaheim, Calif.
|
$3,051
|
14.1 %
|
$2,329
|
17.2 %
|
$2,798
|
16.2 %
|
$3,505
|
14.1 %
|
60.5 %
|
$1,846
|
Louisville/Jefferson
County, Ky.-Ind.
|
$1,253
|
13.9 %
|
$1,046
|
15.6 %
|
$1,148
|
10.1 %
|
$1,420
|
12.1 %
|
-5.0 %
|
-$63
|
Memphis,
Tenn.-Miss.-Ark.
|
$1,408
|
12.2 %
|
$1,149
|
10.0 %
|
$1,368
|
12.4 %
|
$1,552
|
12.5 %
|
N/A*
|
Miami-Fort
Lauderdale-West Palm Beach, Fla.
|
$2,850
|
37.4 %
|
$2,499
|
38.8 %
|
$2,494
|
31.7 %
|
$3,245
|
37.5 %
|
16.6 %
|
$473
|
Milwaukee-Waukesha-West
Allis, Wis.
|
$1,580
|
10.9 %
|
$1,230
|
7.0 %
|
$1,470
|
8.9 %
|
$1,798
|
9.1 %
|
44.2 %
|
$699
|
Minneapolis-St.
Paul-Bloomington, Minn.-Wis.
|
$1,597
|
3.3 %
|
$1,250
|
3.7 %
|
$1,502
|
2.8 %
|
$1,943
|
2.1 %
|
40.9 %
|
$653
|
Nashville-Davidson--Murfreesboro--Franklin,
Tenn.
|
$1,780
|
18.4 %
|
$1,665
|
6.0 %
|
$1,650
|
17.1 %
|
$1,909
|
21.1 %
|
30.6 %
|
$545
|
New Orleans-Metairie,
La.
|
$1,765
|
6.6 %
|
$1,400
|
25.7 %
|
$1,640
|
9.3 %
|
$2,063
|
8.6 %
|
31.5 %
|
$555
|
New York-Newark-Jersey
City, N.Y.-N.J.-Pa.
|
$2,989
|
21.1 %
|
$2,700
|
34.8 %
|
$2,693
|
18.1 %
|
$3,365
|
18.1 %
|
70.0 %
|
$2,092
|
Oklahoma City,
Okla.
|
$1,033
|
14.1 %
|
$958
|
35.1 %
|
$933
|
9.9 %
|
$1,140
|
15.7 %
|
15.8 %
|
$163
|
Orlando-Kissimmee-Sanford, Fla.
|
$1,979
|
23.9 %
|
$1,721
|
22.4 %
|
$1,833
|
23.4 %
|
$2,246
|
25.9 %
|
-0.6 %
|
-$12
|
Philadelphia-Camden-Wilmington,
Pa.-N.J.-Del.-Md.
|
$1,811
|
6.8 %
|
$1,535
|
7.9 %
|
$1,748
|
5.9 %
|
$1,995
|
5.0 %
|
15.0 %
|
$271
|
Phoenix-Mesa-Scottsdale, Ariz.
|
$1,781
|
11.1 %
|
$1,441
|
12.9 %
|
$1,629
|
10.9 %
|
$1,950
|
8.6 %
|
52.2 %
|
$929
|
Pittsburgh,
Pa.
|
$1,583
|
9.4 %
|
$1,294
|
7.8 %
|
$1,570
|
9.4 %
|
$1,742
|
8.0 %
|
-33.0 %
|
-$522
|
Portland-Vancouver-Hillsboro, Ore.-Wash.
|
$1,833
|
10.5 %
|
$1,456
|
3.1 %
|
$1,789
|
10.3 %
|
$2,197
|
9.4 %
|
61.6 %
|
$1,128
|
Providence-Warwick,
R.I.-Mass.
|
$2,200
|
23.8 %
|
$1,759
|
11.0 %
|
$1,908
|
22.5 %
|
$2,500
|
26.7 %
|
18.9 %
|
$417
|
Raleigh,
N.C.
|
$1,675
|
16.7 %
|
$1,531
|
20.4 %
|
$1,562
|
19.1 %
|
$1,894
|
16.8 %
|
29.1 %
|
$487
|
Richmond,
Va.
|
$1,465
|
13.4 %
|
$1,188
|
16.1 %
|
$1,334
|
13.8 %
|
$1,586
|
14.1 %
|
25.9 %
|
$380
|
Riverside-San
Bernardino-Ontario, Calif.
|
$2,622
|
7.2 %
|
$1,840
|
24.3 %
|
$2,203
|
6.4 %
|
$2,850
|
6.7 %
|
6.3 %
|
$165
|
Rochester,
N.Y.
|
$1,362
|
8.4 %
|
$1,000
|
12.0 %
|
$1,318
|
14.6 %
|
$1,498
|
11.2 %
|
19.5 %
|
$265
|
Sacramento--Roseville--Arden-Arcade,
Calif.
|
$2,102
|
7.3 %
|
$1,861
|
3.7 %
|
$1,993
|
5.6 %
|
$2,285
|
7.1 %
|
46.7 %
|
$981
|
San Antonio-New
Braunfels, Texas
|
$1,413
|
16.7 %
|
$1,273
|
14.8 %
|
$1,296
|
18.3 %
|
$1,621
|
16.5 %
|
46.6 %
|
$658
|
San Diego-Carlsbad,
Calif.
|
$3,182
|
19.1 %
|
$2,485
|
17.9 %
|
$2,943
|
23.2 %
|
$3,558
|
19.4 %
|
39.0 %
|
$1,241
|
San
Francisco-Oakland-Hayward, Calif.
|
$3,171
|
12.6 %
|
$2,541
|
15.0 %
|
$2,914
|
11.7 %
|
$3,626
|
9.7 %
|
79.9 %
|
$2,535
|
San
Jose-Sunnyvale-Santa Clara, Calif.
|
$3,324
|
18.5 %
|
$2,529
|
12.7 %
|
$3,104
|
18.9 %
|
$3,735
|
18.5 %
|
65.4 %
|
$2,175
|
Seattle-Tacoma-Bellevue, Wash.
|
$2,299
|
15.7 %
|
$1,892
|
18.1 %
|
$2,270
|
13.3 %
|
$2,731
|
14.6 %
|
78.3 %
|
$1,801
|
St. Louis,
Mo.-Ill.
|
$1,371
|
7.5 %
|
$998
|
7.0 %
|
$1,292
|
7.7 %
|
$1,500
|
7.0 %
|
-20.7 %
|
-$284
|
Tampa-St.
Petersburg-Clearwater, Fla.
|
$2,109
|
16.5 %
|
$2,020
|
20.2 %
|
$1,899
|
16.4 %
|
$2,318
|
17.0 %
|
2.6 %
|
$55
|
Virginia
Beach-Norfolk-Newport News, Va.-N.C.
|
$1,581
|
11.7 %
|
$1,372
|
12.5 %
|
$1,493
|
11.1 %
|
$1,721
|
9.2 %
|
-3.5 %
|
-$55
|
Washington-Arlington-Alexandria, DC-Va.-Md.-W.
Va.
|
$2,198
|
11.5 %
|
$1,757
|
9.9 %
|
$2,082
|
11.6 %
|
$2,610
|
10.1 %
|
38.7 %
|
$850
|
*Memphis excluded from the
Rent vs. Buy analysis due to data irregularities.
Methodology
Rental data as of June 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. National rents were calculated by
averaging the medians of the 50 largest U.S. metropolitan areas,
defined by the Core-Based Statistical Area (CBSA).
Realtor.com® began publishing regular monthly rental
trends reports in October 2020 with
data history going back to March
2019.
Note: With the release of its May
2022 Rental Report, Realtor.com® incorporated a
new and improved methodology (see details here). As a result of
these changes, the rental data released since May 2022 will not be directly comparable with
prior publications and downloaded files. However, future releases,
including historical data, will consistently apply the new
methodology.
Rent vs. Buy Analysis: Subtracts median rents from monthly
starter homeownership costs, defined as: listing prices of for-sale
homes with 0- to 2-bedrooms; a 7% down payment; June's
average Freddie Mac 30-year fixed mortgage rate; HOA fees, taxes,
and homeowner's insurance.
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1 See methodology below for a
detailed breakdown of monthly starter home buying costs.
View original
content:https://www.prnewswire.com/news-releases/realtorcom-june-rental-report-renting-is-more-affordable-than-buying-a-starter-home-in-three-quarters-of-the-largest-metros-301590716.html
SOURCE Realtor.com