Rising mortgage rates and falling rents mean it’s cheaper to rent than buy a starter home in any of the nation’s 50 largest metropolitan areas. New data from Realtor.com Published on Monday.
In February, rental prices for apartments and small houses fell for the seventh consecutive year, with rents falling by about 0.4% from the previous year. This compares to the increase in the purchase price of a starter home, which on average is $1,000 (60%) more than the rent.
This difference was most felt in the nation’s fastest-growing cities. In Austin and Seattle, buying a starter home was more than twice as expensive as renting, and in Phoenix and San Francisco it was nearly twice as expensive.
Rent in the Austin area averages $1,530, but considering average mortgage rates, it would cost about $3,695 per month to buy a similar home. Rent prices in Austin fell a steep 4.4% last year, the fastest rate of any major city in a booming housing market.
Compared to 2023, the gap widened the most in Los Angeles, Nashville, Phoenix, Memphis, and Raleigh, North Carolina.In Richmond, Virginia, renters are saving $700 more than buyers a year ago.
Mortgage rates have risen to nearly 7% in some parts of the country as the Federal Reserve’s high interest rates remain stable.
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