Realtor.com® February Rental Report: Renting Now Beats Buying in All of the Largest U.S. Metros


SANTA CLARA, Calif., March 26, 2024  /PRNewswire/ -- Elevated mortgage interest rates, still-high home prices and falling rents have made it more affordable to rent than buy in all of the top 50 U.S. metros, according to the Realtor.com® Rental Report released today. In February, the mortgage payment on a starter home in the largest metros cost $1,027 (+60.1%) more than the monthly rent in those markets, on average. At the same time last year, 45 metros favored renting.

The top 10 metros with the largest rent versus buy savings (see below for top 50 metros):
1.    Austin-Round Rock-Georgetown, Texas – $2,165 monthly rent savings (141.5% difference)
2.    Seattle-Tacoma-Bellevue, Wash. – $2,422 (121.1%)
3.    Phoenix-Mesa-Chandler, Ariz. – $1,528 (99.0%)
4.    San Francisco-Oakland-Berkeley, Calif. – $2,689 (95.5%)
5.    Los Angeles-Long Beach-Anaheim, Calif. – $2,539 (89.7%)
6.    San Jose-Sunnyvale-Santa Clara, Calif. – $2,780 (86.7%)
7.    Nashville-Davidson-Murfreesboro-Franklin, Tenn. – $1,366 (86.0%)
8.    Portland-Vancouver-Hillsboro, Ore. Wash. – $1,396 (84.4%)
9.    Sacramento-Roseville-Folsom, Calif.  –  $1,514 (82.1%)
10.  Houston-The Woodlands-Sugar Land, Texas – $1,103 (80.0%)

"With rents continuing to fall and the cost of buying a home remaining high, exacerbated by the rise in mortgage rates in the later half of 2023, renting a home is now a more cost-effective option in all major U.S. markets," said Danielle Hale, Chief Economist at Realtor.com®. "Deciding whether to rent or buy often goes beyond a financial advantage though, and likely depends on a consumer's circumstances. 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, but it does not bring the benefit of housing wealth gains over time that owning does and movers should consider their long-term housing plans and personal situation as they make this decision."

The overall advantage of renting continues to grow in most markets
In February, the cost of buying a starter home in the top 50 metros was $1,027 (60.1%) higher than renting one; comparatively, the cost to buy was $865 higher than renting in February 2023 – a $162 higher monthly savings from renting compared to the prior year. The savings are mostly driven by declining rent prices and higher buying costs, especially interest rates – the 30-year fixed mortgage rate remained elevated at 6.78% in February 2024 compared to 6.26% 12 months ago. 

The advantages of renting have become more pronounced across the top metros. Looking specifically at the top 10 metros that favor renting over buying, the average monthly costs for buying a starter home were $1,950 (95.6%) higher than rents – nearly double the cost. Those metros are mostly markets with a higher concentration of tech workers and high earners, where both the average rent and buy costs are higher than the national average.

Renting beats buying in all major metros, especially in south and west; five metros flip from last year
In February, median rents fell across all unit sizes. Despite seven months of annual rent declines, median rents are still $252 (17.3%) higher than the same time in 2020, before the onset of the pandemic. Last February, 45 metros favored renting, but over the past 12 months Memphis, Tenn, Birmingham, Ala., Pittsburgh, St. Louis and Baltimore metros flipped from favoring buying to favoring renting. Four out of five of those markets were among the top markets seeing a high share of investor activity, which may have accelerated the growth of home prices there and increased the overall costs of buying a home, tilting those markets further toward favoring renting over buying.

Austin, Texas, where the monthly cost of buying a starter home was $3,695 – 141.5% more than the monthly rent of $1,530, for a monthly savings of $2,165 – topped the list of markets most favoring renting. Other top markets favoring renting over buying were Seattle, Phoenix, San Francisco and Los Angeles. Metros with diminishing rental advantages were San Jose, Calif.; Dallas; San Francisco; Columbus, Ohio; Miami; and Minneapolis.

Methodology
Rental data as of February 2024 for studio, 1-bedroom, or 2-bedroom units advertised as for-rent on Realtor.com®. Rental units include apartments as well as private rentals (condos, townhomes, single-family homes). We use rental sources that reliably report data each month within the top 50 largest metropolitan areas. Realtor.com® began publishing regular monthly rental trends reports in October 2020 with data history stretching back to March 2019.

The monthly cost of buying a home was calculated by averaging the median listing prices of studio, 1-bed, and 2-bed homes, weighted by the number of listings, in each housing market. Monthly buying costs assume a 8% down payment, with a mortgage rate of 6.78%, and include taxes, insurance and HOA fees.

With the release of its January 2024 rent report, Realtor.com® incorporated a new and improved methodology for capturing and reporting more comprehensive rental listing trends and metrics. The new methodology is expected to yield a cleaner, more representative and more consistent measurement of rental listings and trends at both the national and local level. The methodology has been adjusted to better represent the true cost of primary housing for renters. Most areas across the country will see minor changes with a smaller handful of areas seeing larger updates. As a result of these changes, the rental data released since January 2024 will not be directly comparable with previous releases and Realtor.com® economics blog posts. However, future data releases, including historical data, will consistently apply the new methodology.


Mark Hoeft ~ 850-525-2765 ~ Mark@TheFloridaCoast.com ~ The Florida Coast Realty Pensacola

Advice of the DaY

Buy next year’s wood for the stove now and season it yourself.

Mortgage Rates Edge Higher

By Alex Veiga

The average rate on a 30-year mortgage rose to 6.88% this week -- the highest level since early March. Rates on 15-year fixed-rate mortgages rose to 6.16%.

LOS ANGELES — The average long-term U.S. mortgage rate rose to its highest level in five weeks, a setback for prospective homebuyers during what’s traditionally the busiest time of the year for home sales.

The average rate on a 30-year mortgage rose to 6.88% from 6.82% last week, mortgage buyer Freddie Mac said Thursday. A year ago, the rate averaged 6.27%.

When mortgage rates rise, they can add hundreds of dollars a month in costs for borrowers, limiting how much they can afford at a time when the U.S. housing market remains constrained by relatively few homes for sale and rising home prices.

Rates have been mostly drifting higher in recent weeks as stronger-than-expected reports on employment and inflation have stoked doubt among bond investors over how soon the Federal Reserve will move to lower its benchmark interest rate. The central bank has signaled that it expects to cut its short-term rate three times this year once it sees more evidence of cooling inflation.

On Wednesday, Treasury yields jumped in the bond market following a report showing that inflation was hotter last month than economists expected. The March consumer prices report was the third straight showing inflation readings well above the Fed’s 2% target. A report on Thursday showed inflation at the wholesale level was a touch lower last month than economists expected.

The yield on the 10-year Treasury, which lenders use as a guide to pricing loans, jumped to 4.57% on Thursday afternoon, its highest level since November. How the bond market reacts to the Fed’s interest rate policy, the moves in the 10-year Treasury yield, as well as other factors can influence mortgage rates.

After climbing to a 23-year high of 7.79% in October, the average rate on a 30-year mortgage has remained below 7% since early December, though it also hasn’t gone below the 6.6% it averaged in mid-January

Mortgage rates will likely continue to hover between that 6.6% and 7% range until inflation shows convincing progress towards the Fed’s target, said Hannah Jones, Realtor.com’s senior economic research analyst.

“Eager buyers and sellers are hoping to see more favorable housing conditions as the spring selling season kicks off,” said Jones. “However, mortgage rates have offered little relief as economic data, as measured by both inflation and employment, remains strong.”

The U.S. housing market is coming off a deep, 2-year sales slump triggered by a sharp rise in mortgage rates and a dearth of homes on the market. The overall pullback in mortgage rates since their peak last fall helped spur a pickup in sales the first two months of this year.

Sales of previously occupied U.S. homes rose in February from the previous month to the strongest pace in a year. That followed a month-to-month home sales increase in January.

Still, the average rate on a 30-year mortgage remains well above where it was just two years ago at 5%. That large gap between rates now and then has helped limit the number of previously occupied homes on the market because many homeowners who bought or refinanced more than two years ago are reluctant to sell and give up their fixed-rate mortgages below 3% or 4%.

Many economists still expect that mortgage rates will ease moderately later this year, though most forecasts call for the average rate on a 30-year home loan to remain above 6%.

The cost of refinancing a home loan also got pricier this week. Borrowing costs on 15-year fixed-rate mortgages, often used to refinance longer-term mortgages, rose this week, pushing the average rate to 6.16% from 6.06% last week. A year ago, it averaged 5.54%, Freddie Mac said.

Events

Charles A. Gayler received a patent for a fireproof safe– 1833
Charles Gayler received a patent for a fireproof iron chest – 1833
First U.S. championship billiards game– 1859
The US Civil War began– 1861
Bill Haley and His Comets recorded Rock Around the Clock– 1954
The polio vaccine developed by Dr. Salk was found to be successful after subjection to a year of clinical trials– 1955
Aquarius/Let the Sunshine In by the 5th Dimension topped the charts for 6 weeks– 1969
Space shuttle Columbia first launched– 1981
Harold Washington was elected the first African-American mayor of Chicago– 1983
Texaco Inc. became the largest U.S. company in history to file bankruptcy after it is ordered to pay Pennzoil $8.53 billion in damages for unfair business practices– 1987
Golfer Fred Couples won the Masters tournament– 1992

Mark Hoeft Broker/Owner

Specializing in Pensacola Florida luxury homes & Pensacola Beach Florida luxury condo for 

buyers &  Sellers

Welcome to TheFloridaCoast.com; I would like to introduce myself, my name is Mark Hoeft I am a Florida Real Estate Broker & Owner of The Florida Coast Realty Pensacola LLC in Pensacola, Pensacola Beach, & Gulf Breeze Florida, I also the proud owner of The Florida Coast Realty West Palm & The Florida Coast Realty Destin Florida. It would be my honor to help you find your slice of Florida's beautiful Emerald Coast that you've been searching for. Whether you are looking for your primary home, a second home, or investment property for your Real Estate portfolio on Florida's beautiful Gulf Coast. I specializing in Beach Homes, Condos, and Townhouses. I use my 20 years of knowledge and dedication to hard work to make your real estate transaction as smooth as possible. I've become a leader in buying and selling Pensacola Real Estate, Scenic Gulf Breeze Homes, and Pensacola Beach Condos & Homes. I pride myself in my professionalism and expertise. I've closed over 350 real estate transactions and have totaled more than $40,000,000.00 in sales during the past 20 years.

Born

John George Lambdon (governor-general of British North America) – 1792
Beverly Cleary (author) – 1916
Dr. Peter Safar (originator of CPR) – 1924
Montserrat Caballe (opera singer) – 1933
Herbie Hancock (musician) – 1940
David Letterman (talk show host) – 1947
Tom Clancy (author) – 1947
David Cassidy (singer and actor) – 1950
Andy García (actor) – 1956
Vince Gill (musician) – 1957
Jennifer Morrison (actress) – 1979
Claire Danes (actress) – 1979
Stubbs the Cat (honorary mayor of Talkeetna, Alaska) – 1997

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Died

Clara Barton (founder of the American Red Cross) – 1912
Franklin D. Roosevelt (32nd U.S. president) – 1945
Sugar Ray Robinson (boxer) – 1989
Abbie Hoffman (social and political activist) – 1989
Georgia Engel (actress, best known as Georgette Franklin on The Mary Tyler Moore Show) – 2019