It’s Now Officially Cheaper To Rent Than Buy a Home in the 50 Largest U.S. Metros

Published by | March 26, 2024

Rental prices are falling—and it’s helping to make it cheaper to be a paying tenant than a homebuyer in America’s 50 largest metropolitan areas.

Rentals fell for the seventh month in a row on an annual basis, according to the® February rental report. Prices dropped annually by 0.4%, or $7, to a median of $1,708 a month in February, according to the report. Prices were $4 lower than in January.

Purchasing a starter home was 60.1% higher, costing buyers about $1,027 more every month.

The drop in median rents is enough money for a McDonald’s Big Mac every month—but probably not with a side of fries.

“In all of the major housing markets, renting is more affordable than buying a starter home,” says economist Jiayi Xu. “It’s important for first-time buyers who are thinking, ‘Should I buy now or later?’ This will give them a clearer picture about their financial costs.”

The report looked at asking rents for studios as well as one-bedroom and two-bedroom apartments, condos, townhomes, and single-family homes in the 50 largest metros. (Metros include the main city and surrounding towns, suburbs, and smaller urban areas.)

The biggest price cuts in the rental market were for the smallest units. Rents for studios fell 1.5% year over year in February, to a median of $1,426 a month.

Prices ticked down 0.8% for two-bedroom units, to $1,889 a month, and dipped 0.4% for one-bedroom units. The median monthly cost of a one-bedroom unit was $1,587.

“Studios are expensive for one person to live in,” says Xu. “Some young renters may move into larger units and find roommates to save money.”

The shift in the market toward renting becoming a more affordable option than buying is due to a few reasons: Rents have come down (albeit only a little) as builders construct more apartment buildings, and home prices continue to rise at a time when mortgage rates are high.

Austin, TX, topped the list of places where buying a starter home was significantly more expensive than renting one.

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