Buying a home is cheaper than renting in only 4 U.S. cities. Here’s where they are.
Even the rent is painfully late. High among the largest US cities, buying a home is an even more valuable proposition. In fact, there are now only four major metro areas where buying a home is cheaper than renting. A new study The real estate company has been acquired by Redfin.
Those cities are Detroit, Philadelphia, Cleveland and Houston, Jason Alim, senior vice president of real estate operations at Redfin, told CBS News. In all other major cities — from San Jose, Calif., to Pittsburgh, Pennsylvania — you’re financially better off renting, the company’s analysis found.
Aleem said Detroit, Philadelphia, Cleveland and Houston have not seen home prices rise during the pandemic as much as other major U.S. cities, which is why they are currently more affordable for homebuyers than elsewhere. . Home prices across the country have risen by double digits during the pandemic, and now house hunters are facing another blow to their wallets. Rising mortgage rates.
“Prices are really an issue — they need to be in the 4% to 3% range” to make buying a place less expensive than renting in most cities, Alim said.
The typical 30-year mortgage rate topped 7 percent this week, meaning it’s more than twice as expensive to finance a home purchase now than in 2021 and early 2022, when rates were around 3 percent or even higher. was less
There is a cost difference between owning a home versus renting an apartment. Now its width is more than 15 years.According to a recent analysis by the National Multifamily Housing Council. The organization found that homeowners now pay an average of $1,176 a month more than the typical rent for a professionally managed apartment complex.
Where it is cheaper to rent.
San Jose, California — the heart of Silicon Valley — is the city where it’s most expensive to buy than to rent, with Redfin finding that the typical home in the area is 165% more expensive than renting. The median estimated monthly mortgage payment for homebuyers is more than $11,000, compared to a median monthly rent of about $4,200.
San Francisco comes in second with a 139% ownership premium, followed by Oakland, California, with a 99% premium. Even Pittsburgh, often considered one of the nation’s more affordable cities for residential real estate, is now more expensive for home buyers, with Redfin finding that the typical home now costs $1,648 in mortgage payments. required, compared to $1,619 for rent.
Aleem said he has some advice for potential buyers: “Marry the house, but set the rate.”
In other words, find a home that works for you, understanding that mortgage rates change over time in response to the Federal Reserve’s federal funds rate and other market conditions. The Fed has been raising rates for more than a year in an effort to control inflation, which has spurred a rise in mortgage rates.
Aleem noted that “there will be opportunities for refinancing” when rates are lower.
Still, Redfin predicts that mortgage rates will drop to about 6% by the end of the year, but it’s “unlikely” that rates will return to 3% in the near future.