Every Major U.S. City Where It’s More Expensive to Rent Than Buy

It’s no secret that prime rates of interest and a low provide of properties on the market have pushed costs up, grounding the housing market to a close to halt. Conversely, the rental market has thawed significantly after scorching-hot lease rises in 2021 and 2022.

Think about these information factors. Based on the Nationwide Affiliation of Realtors, months of provide for current properties sits at simply 3.0, down from 4.6 initially of the pandemic. The S&P CoreLogic Case-Shiller Residence Worth Indicies hit an all-time in December. And the typical 30-year mortgage rate of interest has been hovering round 7%.

Nonetheless, based on Zumper’s year-over-year information, lease development has stalled. Two-bedroom lease development has fallen to only barely above 0%, and one-bedroom lease development has turned unfavorable.

With the 2 markets diverging, this leaves potential patrons with a easy query: The place are mortgage funds inexpensive than renting?

BiggerPockets crunched the info to supply the reply for cost-conscious dwellers. Utilizing Zillow’s metro space January information for each house costs and lease, we assumed a 7% rate of interest to calculate a month-to-month mortgage cost to check to lease within the 50 largest metro areas in the US.

However, the mortgage cost is essentially depending on the down cost. Based on the Nationwide Affiliation of Realtors, the typical down cost for first-time patrons is 6%, whereas it’s 17% for repeat patrons. This makes intuitive sense, as repeat patrons have probably constructed up fairness of their current properties, significantly those that purchased within the decrease interest-rate atmosphere.

The 2 maps present the place it’s costlier to purchase (blue dots) and costlier to lease (purple dots) for each first-time patrons and repeat patrons. The scale of the dot represents how far more costly it’s for the given state of affairs in that metro space.

Use these pretty much as good indicators of what it takes to enter a market and the way simple it’s to money move whenever you’re there. Observe that in markets the place it’s cheaper to purchase than lease, you’re extra prone to money move.

Mapping the Markets

Observe By BiggerPockets: These are opinions written by the writer and don’t essentially signify the opinions of BiggerPockets.