It’s Cheaper to Rent Than Buy in America’s 50 Largest Metro Areas

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A new report is settling the age-old debate over owning versus renting

According to Realtor.com, it was cheaper in February to be a tenant than a first-time homebuyer in all 50 of the country’s largest metro areas. The listing site found that in February, rental rates continued to fall for the seventh month in a row. At the time, prices dropped 0.4 percent, or $7, to a median price of $1,708 a month. Comparatively, purchasing a starter home was 60.1% more expensive, costing buyers about $1,027 more every month, pushing the median purchase cost to $2,835 per month.

“In all of the major housing markets, renting is more affordable than buying a starter home,” Realtor.com economist Jiayi Xu said in the report. “It’s important for first-time buyers who are thinking, ‘Should I buy now or later?’ This will give them a clearer picture about their financial costs.” 

Across the U.S., studios saw the biggest price chops among the property types analyzed, which included one-bedroom and two-bedroom apartments, condos, townhomes, and single-family houses. Rents for studios dropped to a median of $1,426 a month, while one-bedroom units averaged $1,587 and two-bedrooms clocked a monthly cost of $1,889.

Seattle renters paid an average of $2,000 per month in February.

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If you’re looking to make a move, there are, however, still some metropolitan areas where tenants can expect to spend less money on rent than a mortgage. At the top of the list is Austin, Texas, where the monthly rent payment was 141.5 percent cheaper than a monthly mortgage in February. Here, renters shelled out $1,530 a month on rent while buyers coughed up $3,695 to own a home. Seattle, Washington, which also ranked toward the top, had a median monthly rent payment of $2,000 compared with a monthly mortgage median of $4,422. 

Renters in Phoenix, Arizona, saw the third-biggest savings at 99 percent, followed by San Francisco and Los Angeles, which had savings of 96 percent and 90 percent, respectively. “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. The financial scales have tipped monthly costs in favor of renting over buying,” said Danielle Hale, chief economist at Realtor.com. 

Of course, there are obvious benefits to home ownership. Chief among them is expanding your investment portfolio. “In the short term, renting may be a good way to save money,” adds Xu. “But in the long term, buying could help you to build wealth.”