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Renting is now cheaper than buying a starter home in most of the US.

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The median rent hit an all-time high of $1,876 in June, up 14 percent from a year ago, but that still represents a monthly savings of $561 compared to the monthly cost of buying a first home, which jumped to $2,437. said in a report by Realtor.com.  .  San Diego and San Jose have the highest rents in the US.
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As the cost of renting and buying a home has skyrocketed to record highs, the eternal question of whether to rent or buy has never been so acute.

Renting is now cheaper than buying a starter home in three-quarters of the top 50 U.S. cities, according to a report from Realtor.com released Thursday, a dramatic change from a few months earlier, when buying was usually cheaper.

The median rent hit an all-time high of $1,876 in June, up 14 percent from a year ago, but that still represents a monthly savings of $561 compared to the monthly cost of buying a first home, which jumped to $2,437. says in the report.

Back in January, buying a starter home was a cheaper long-term option than renting in more than half of US cities.

But since then, mortgage rates have more than doubled, dramatically increasing monthly payments for homebuyers. At the same time, house prices continue to rise, setting a new record last month, industry data show.

The median rent hit an all-time high of $1,876 in June, up 14 percent from a year ago, but that still represents a monthly savings of $561 compared to the monthly cost of buying a first home, which jumped to $2,437. said in a report by Realtor.com. . San Diego and San Jose have the highest rents in the US.

The cities with the lowest rents included Oklahoma and Louisville.

The cities with the lowest rents included Oklahoma and Louisville.

The map shows the five cities with the highest savings for renters versus buyers (yellow) and the five cities where homebuyers continue to save the most per month (magenta).

The map shows the five cities with the highest savings for renters versus buyers (yellow) and the five cities where homebuyers continue to save the most per month (magenta).

Median rent (red) and annual change in rent (grey) are shown for the last three years.  Rents rose, but house prices rose even faster, new study shows

Median rent (red) and annual change in rent (grey) are shown for the last three years. Rents rose, but house prices rose even faster, new study shows

As a result, renting is now a relatively cheaper option for most city dwellers, and the difference is most noticeable in large cities with a high overall cost of living.

In San Francisco, the median rent is $3,171, while the cost of buying a home for beginners averages $5,705 per month — a difference of $2,535 per month.

In New York City, on average, renters save $2,092 monthly on homebuyers who have to pay $5,081 monthly if they buy a home today.

However, there remain cities where buying a house is a cheaper option. In Pittsburgh, where monthly payments for starter homes average $1,061, homebuyers save $522 per month over rent.

In Birmingham, Alabama, homebuyers pay $377 less per month than renters, while St. Louis saves $284 per month.

The handful of cities that still favored new buyers tended to be in the South and Midwest.

The study notes that in none of these cities did the median rent exceed the national average, but in all the monthly cost of buying a starter home was well below the national average.

The annual change in prices for starting housing is observed two years ago.  Although prices have slowed down in recent months, they are still rising.

The annual change in prices for starting housing is observed two years ago. Although prices have slowed down in recent months, they are still rising.

Average house prices in May and price change from last year are visible for each region.

Average house prices in May and price change from last year are visible for each region.

Cities with the largest monthly cost differentials for renters and homebuyers

Rent cheaper:

Austin, Texas

San Francisco

Seattle

New York

San Jose, California

Portland, Oregon

Los Angeles

Boston

Houston

Phoenix

Cheaper to buy:

Pittsburgh

Birmingham, Alabama

Saint Louis

cleveland

Baltimore

Louisville, Kentucky

Virginia Beach

Indianapolis

cincinnati

Kansas City

Source: realtor.com

“Rent-friendly cities are larger, more geographically dispersed, and tend to be markets with a higher concentration of tech workers and higher-paid workers,” the report says.

Average rent in Manhattan hits record $5,000

According to brokerage firm Douglas Elliman, the median rental price in Manhattan reached another all-time high of $5,058 in June.

Manhattan’s median rent, the average of the overall sample, also hit a record $4,050 in June after hitting $4,000 for the first time in May.

Elliman’s report only looked at rent in Manhattan, while Realtor.com’s study included the entire New York metro area.

“Austin, where the monthly purchase cost is nearly double the monthly rental cost, leads the way in bargain rent.”

Of course, there are intangible factors that influence the decision to rent or buy, in addition to monthly costs.

Homebuyers build up capital over time and usually expect to sell their home for a profit in the future.

On the other hand, tenants may be reluctant to take out a mortgage and appreciate the freedom from maintenance and upkeep that comes with owning a home.

The study calculated monthly prices for starter homes by focusing on listings of 0-2 bedroom homes, assuming a 7 percent down payment on an average 30-year mortgage rate, and adding in average taxes, fees, and insurance costs.

Earlier this week, other industry data showed existing home prices at their highest level on record, even as mortgage demand hit a 22-year low due to soaring interest rates.

The national average home price jumped 13.4% in June from a year ago to $416,000, the highest ever, the National Association of Realtors said Wednesday.

According to data for 1999, this is an all-time high, according to NAR. Despite the rise, house prices are not rising as much as at the beginning of this year.

Average 30-year fixed-rate mortgages (blue) since 2000 seen compared to Federal Reserve benchmark interest rates (red)

Average 30-year fixed-rate mortgages (blue) since 2000 seen compared to Federal Reserve benchmark interest rates (red)

The national median home price jumped 13.4 percent in June from a year earlier to $416,000, the highest since 1999.

The national median home price jumped 13.4 percent in June from a year earlier to $416,000, the highest since 1999.

The National Association of Realtors said its Home Affordability Index — a measure that uses average existing home prices, median household income and average mortgage rates to calculate home affordability — fell to 102.5 in May last year, the lowest level since 2006. of the year.

The National Association of Realtors said its Home Affordability Index — a measure that uses average existing home prices, median household income and average mortgage rates to calculate home affordability — fell to 102.5 in May last year, the lowest level since 2006. of the year.

“Each month it seems like the price increase is less strong than previous months,” said Lawrence Yun, chief economist at NAR.

At the same time, the average contract rate on 30-year fixed-rate mortgages reached 5.82 percent, about double the recent low in January.

The Federal Reserve raised its benchmark interest rate to fight inflation, but rising borrowing costs quickly affected the housing market.

Mortgage demand dropped 6 percent last week compared to the previous week, according to a report from the Mortgage Bankers Association, amid rising house prices and interest rates.

This is the lowest level of mortgage applications since 2000, said Joel Kahn, MBA assistant vice president of economic and industry forecasting.

Kan said the key factors affecting homebuyer demand are “a deteriorating economic outlook, high inflation and persistent affordability issues.”

“The decline in recent bids is due to slower housing construction due to reduced buying traffic and continued shortages of building materials and higher costs,” he added.

#Renting #cheaper #buying #starter #home

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