Wednesday 1 May 2024

Study Finds That Renting Is Cheaper Than Buying A Home In All 50 Of America’s Largest Metro Areas

 Renting has become more affordable than buying a home in 50 of the largest metro areas in the United States, a recent study reveals.

The analysis, performed by Bankrate, found that it costs about 37 percent more a month to buy a home than to rent nationwide. The cost disparity is largely a product of rising home prices, increased mortgage rates, and a slowdown in rent hikes, the study noted.

The average monthly rent payment is $1,979 while the average monthly payment on a $412,778 home, the median price, is just over $2,703. The average monthly mortgage rate, meanwhile, is 7.33 percent as of April 17th, 2024, a three percent increase since March 2022.

While the trend is persistent across the 50 largest metropolitan areas in the United States, the disparity between the costs of renting and buying a home vary wildly depending on location.

The analysis uses the buy-to-rent ratio, which compares “typical monthly mortgage payments to typical monthly rent payments.” The disparity is most drastic in California’s Bay Area, with a buy-to-rent ratio of over 180 percent in San Francisco, Oakland, and Berkeley and a 162 percent ratio in San Jose, Sunnyvale, and Santa Clara.

The analysis found that Seattle, Tacoma, and Bellevue in Washington had a ratio of 125 percent while Salt Lake City, Utah and Austin, Round Rock, and Georgetown, Texas had ratios in the 80’s.

The buy-to-rent ratio was the least severe in Detroit, Michigan at only 2 percent, followed by 5.2 percent in Pittsburgh, Pennsylvania and just under 9 percent in the metro area including Philadelphia. Cleveland, Ohio’s ratio was found to be 11.6 percent, while Buffalo, New York was just over 20 percent.

While the costs of buying a home are increasing, a wide majority of Americans still say that they want to own a home, with a recent report finding that 78 percent of people say that owning a home is part of the American dream. Among those who have not purchased a home, 56 percent say that they lack the income to do so, while 47 percent say that home prices are too high and 42 percent cite their inability to afford the down payment and closing costs.

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