Mortgage payments fall lower than rent in 22 of the 50 largest US metros
In
This trend also holds true across the
"This analysis shows homeownership may be more within reach than most renters think," said
Beyond monthly rent or mortgage payments, there are additional costs for both renting and homeownership that must be considered. Homeowners pay taxes, insurance, and utilities on a monthly basis, and should be prepared for ongoing maintenance costs. Renters also typically need insurance, and will often pay extra for parking, pets, and utilities.
There are pros and cons to both buying and renting, but generally, the longer you plan to stay in your house, the more financial sense it makes to buy. Mortgage payments can decrease over time by paying off private mortgage insurance or refinancing your loan at a lower rate, whereas rent payments have the potential to increase at each lease renewal. Beyond that, mortgage payments build homeowners' equity in their house — increasing their financial stake in their home as time passes.
Rent growth has come down from pandemic-era highs and returned to long-run norms, but prices are still climbing. The typical rent is 3.4% more expensive than a year ago and nearly 34% more expensive than before the pandemic. The for-sale market, on the other hand, is offering opportunities for buyers heading into the fall, with more than 1 in 4 sellers cutting prices. With inventory up 22% compared to a year ago, buyers are gaining bargaining power.
One easy way for buyers to see if their potential mortgage payment is cheaper than their rent is to use BuyAbility, a new tool from
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Typical Mortgage Payment |
Monthly Savings |
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Virginia Beach |
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Buffalo |
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1
Analysis used Zillow data to compare the cost of a monthly mortgage payment to the typical rent payment among the 50 largest |
2 Assuming a 20% down payment, a 6.5% interest rate and a 30-year fixed mortgage. |
About
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Other costs on both sides. Taxes, insurance, maintenance, utilities. For renters – may be charged extra for parking, pets, potentially utilities. The longer you plan to stay in your house, the more sense it makes to buy. Mortgage payments are relatively fixed, whereas rent payments have the potential to increase at each lease renewal.
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