Renting a house used to be a good idea for those who were saving up money to buy but didn’t want to live in an apartment anymore. Now, even with the housing market super hot, in some cities, rent is so high that buying a home is cheaper.
The monthly cost of rent across the U.S. has increased by more than 10% for the eighth month in a row, according to Realtor.com’s recent study. The city where rent has increase the most is the Miami-Fort Lauderdale-West Palm Beach market in Florida.
Rents have gone up so much in some areas of the country that buying a home may actually be cheaper than renting, even after you factor in the down payment. To look into the possibilities, Realtor.com calculated the median rent and buying prices of smaller houses in the 50 largest metropolitan areas in the U.S. All in all, in 26 of the cities, the monthly cost to buy was actually lower than to rent. For the down payment, the study used an average 7%, which is typical for first-time buyers. Down payments, by the way, are the biggest hurdle for first-time homebuyers, and even those purchasing their second or third homes.
What’s interesting is that the study found that in one Michigan area, it’s cheaper to buy than rent: Detroit-Warren-Dearborn. That area was only behind Birmingham-Hoover, Alabama; Cleveland-Elyria, Ohio; Pittsburgh, Pennsylvania; and St. Louis, Missouri in the study. Of course, while it may be cheaper to buy than rent in these areas, the crew at Realtor.com warns that the price of owning a home is also going up, as are mortgage rates, so it’s best to look at the situation on a case-by-case basis. The study states that the median monthly cost of owning a starter home is currently $1,867, which is a whopping 11% higher than it was last year at this time. At this rate, it look like I won’t be buying first home time year. I’ll wait until the market fall, but who knows when that will be.