7 months ago
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As first-time homebuyers contemplate their housing options, the financial calculus between renting and owning is essential. Against the backdrop of elevated mortgage rates and soaring home prices, discerning the evolving financial dynamics between renter-friendly and buyer-friendly markets is also paramount.
A report released Tuesday by Realtor.com highlights a significant disparity in costs between buying and renting a starter home across the country’s 50 largest metropolitan areas. As of February 2024, the monthly cost of purchasing a starter home surpassed that of renting by $1,027, a 60.1% difference.
Notably, renting emerged as the most affordable option across all 50 major metros, an increase from 45 metros in February 2023. Cities such as Memphis, Tennessee; Birmingham, Alabama; Pittsburgh; St. Louis; and Baltimore transitioned over the previous 12 months from markets that favor buyers to ones that favor renters.
Within the top 10 metros that favor renting over buying, the disparity in monthly payments for a starter home compared to rents was stark. With average monthly payments for a starter home exceeding rents by $1,950, or 95.6%, these markets are popular among tech workers and other high-earning professionals.
Austin topped the list of markets that favor renting. There, the monthly cost of purchasing a starter home surged to $3,695, 141.5% higher than the monthly rent of $1,530. And despite Houston’s monthly purchase costs falling below the average of the top 50 markets, it emerged as one of the top rent-favoring metros in February 2024.
Overall, the advantage of renting has become more pronounced across the top 50 metros. Last month, the cost to buy in the top 50 metros was $1,027 per month (60.1%) higher than the cost to rent. This compares to a difference of $865 per month (50.4%) in February 2023.
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