Jhe monthly cost of owning a first home was more affordable than the rent for a similarly sized unit in just over half of the 50 largest metropolitan areas in the United States in January, according to a new report from Realtor. com, an SEO platform.
The top markets that favored start-up home buyers were Birmingham, Alabama ($533 per month less than rental), Cleveland ($516 less) and Pittsburgh ($585 less). The report defined a first home as having no more than two bedrooms, and monthly costs included mortgage payment, taxes, insurance, and homeowners association fees; the methodology assumed a down payment of 7% and a mortgage rate of 3.45%.
The report attributes this trend to soaring rental prices across the country. The median rental price in the United States jumped 19.8% year-over-year in January. This marks the eighth consecutive month of double-digit rental price increases. Realtor.com expects rents to continue to exceed listing prices in 2022.
Alwayslodging the prices were raised as well as. The monthly cost of buying a home with up to two bedrooms rose 11% in January, year-over-year. Danielle Hale, Chief Economist of Realtor.com said in a press release that those looking to buy homes will find lower costs now than later in the year, as mortgage rates keep going up. (See Money’s picks for the best mortgage lenders.)
Housing prices still exceed rental costs in major tech hubs
Contrary to the general trend, rental prices remain below starting house costs in some parts of the country.
According to the Realtor.com study, eight of the top 10 metropolitan markets that favored rentals were in major technology hubs like Austin, Texas and San Francisco. Monthly homeownership costs in these 10 metropolitan areas were 41.6% ($978) higher than rents.
In January, the average monthly cost of ownership was 24.8% ($536) higher than the cost of renting in 24 of the 50 largest cities.
The flow housing market faces limited inventory and high asking prices in major technology hubs. Additionally, Realtor.com notes that inventory in major tech hubs typically includes a high share of condos, which typically carry high homeowners association fees, which can significantly increase monthly housing costs.
Every Saturday, Money’s real estate editor, Sam Sharf, dives deep into the world of real estate, providing a fresh take on the latest housing news for homeowners, buyers and dreamers.
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