Buying Versus Renting Gap Narrows Slightly
Purchasing a home has become more attractive in many of the nation's largest metros.
SANTA CLARA, CA—For many markets the reality has been that renting was cheaper than home ownership thanks to years of skyrocketing home prices. Now, however, the combination of rising rents, lower mortgage rates and home prices that are beginning to moderate is making purchasing a home more attractive in more of the nation’s largest metros, according to realtor.com’s newly-released quarterly Rent vs. Buy report.
The report, which analyzed the cost of buying versus renting in 593 US counties in the fourth quarter of 2019, found that it was cheaper to buy than rent in 16% of the counties with populations of 100,000 or more, up from 12% a year earlier.
“Due to a combination of factors, we saw the monthly cost to buy a home fall 1% year-over-year, while rents increased 4% during the same time frame,” realtor.com Senior Economist George Ratiu says in prepared remarks.
Still, it is still cheaper to rent than buy in 84% of the nation’s largest counties, including New York City, San Francisco and Los Angeles.
The monthly cost to buy the national median-priced home was approximately $1,600, or 30% of the national median household income. The cost to rent increased to $1,319, representing 25% of the median household income in the fourth quarter of 2019.
Over the past year, 26 of the 593 counties analyzed shifted from being more affordable to rent to being more affordable to buy, including in the Cleveland, Bronx County, NY, Indianapolis and Columbia, DC areas.
The median listing prices in the counties where buying a home was more affordable were on average 53% lower than the national median listing price of $300,000. Median rents, while still less expensive, were only 11% cheaper on average.