Renters could save by buying

As housing affordability issues rise across the biggest U.S. markets, new data suggests many renters who make the transition to first-time buying could save on monthly payments, according to the® Monthly Rental Report released today. In January, the monthly cost of buying a starter home1 was more affordable than renting a similar-sized unit in 26 of the 50 largest metros, led by secondary cities like Birmingham, Ala., Cleveland and Pittsburgh.

With buying conditions remaining competitive nationwide, potential monthly starter home savings are largely attributed to skyrocketing rents. In January, the U.S. median rental price increased by double-digits for the eighth straight month, up 19.8% year-over-year. Compared to growth in the monthly cost of buying a home with up to two-bedrooms (+11.0% year-over-year), all rental unit sizes posted higher yearly gains in January: Studios, up 21.0% ($256); 1-bedrooms, up 19.2% ($266); and 2-bedrooms, up 19.2% ($323).

January 2022 Rental Metrics – National

“U.S. rental markets are more than making up for lost time, with January data showing national rents continued to surge by double-digits over last year – and at a faster pace than for-sale home prices. So much faster, in fact, that even as monthly starter home costs increased in many of the markets that favored buying, rents for a similar-sized unit were 20% higher,” said® Chief Economist Danielle Hale. “While both rental and homebuying costs are rising, a number of factors could tip the affordability scale in favor of first-time buying for many Americans this year. Rents are forecasted to outpace listing price growth in 2022 and are already accelerating across all unit sizes. Additionally, survey data shows the majority of landlords plan to raise rental asking prices this year. But the buy-versus-rent decision ultimately depends on personal circumstances like where you live, your financial situation and how long you want to live in your next home. As mortgage rates continue climbing, those looking to buy their first home in 2022 are more likely to find lower costs now than later in the year, but home selection is expected to improve as we move toward spring, when many homeowners target listing their home for sale.”

Unit SizeMedian RentChange over Jan. 2021Change over Jan. 2020

Buy Over Rent: First-time buying budgets stretch further in secondary metros

January data indicates that surging rents are increasingly driving relative affordability in the starter home buying market, despite rising listing prices and mortgage rates. More than half of the 50 largest U.S. metros favored buying in January and the gap between monthly starter home costs and rents in these areas was higher than last summer. Many of the top buying markets are relatively affordable secondary metros that are attracting remote workers from expensive big tech cities, including first-time buyers like millennials. Now that downtown offices are reopening, workers with continued flexibility could be facing relatively less competition in the top markets that favored starter home buying in January. 

  • Across the 50 biggest U.S. metros in January, the median listing price for a starter home ($295,360) was lower than the median overall ($375,000). However, factoring in costs like mortgage rates and HOA fees, monthly starter home costs ($1,867) were slightly higher than rents at the national level ($1,789).
  • In 26 of the 50 largest markets, the monthly cost of buying a starter home was an average of 20.6% ($323) lower than renting one in January.
  • On average, the January difference between monthly starter home costs and rents was even greater in the top 10 markets that favored buying (-32.6%), led by: Birmingham, Ala. (-44.3%), Cleveland (-38.9%), Pittsburgh (-38.3%) and St. Louis (-37.3%). Two of these markets – Tampa (+37.5%) and Orlando (+34.8%) – were among Sun Belt metros that saw January’s fastest annual rent growth (see table below).
  • Illustrating overall declining affordability, both the monthly cost of buying a starter home and renting one increased in eight of the top 10 markets that favored buying in January, including Tampa at No. 9. Even so, as over one-third (38.1%) of Tampa’s recent home shoppers came to the area from relatively expensive regions like the northeast, the metro offered lower monthly starter home buying costs ($1,543) than a big tech city like New York in January ($4,115).

Top 10 Metro Areas that Favor Buying a Starter Home Over Renting One (Jan. 2022)

RankMetro% Difference (Buy-Rent)$ Difference (Buy-Rent)Buy Cost per MonthBuy CostY/YMedian Rent per MonthRentY/Y
1Birmingham, Ala.-44.3%-$533$668-5.9%$1,20118.6%
2Cleveland, Ohio-38.9%-$516$80913.5%$1,3259.1%
3Pittsburgh, Penn.-38.3%-$585$9453.2%$1,53018.6%
4St. Louis, Mo.-37.3%-$483$81216.2%$1,29519.5%
5Detroit, Mich.-33.3%-$449$901-10.1%$1,35010.1%
6Baltimore, Md.-30.0%-$531$1,2425.2%$1,77314.4%
7Virginia Beach, Va.-27.2%-$409$1,09114.6%$1,50016.7%
8Orlando, Fla.-27.1%-$493$1,32721.8%$1,82034.8%
9Tampa, Fla.-25.5%-$527$1,54327.3%$2,07037.5%
10Louisville, Ky.-23.7%-$284$9168.5%$1,20017.1%

Rent Over Buy: Big tech cities offer relatively affordable rents and flexibility
Big tech cities, where real estate typically comes at a premium, dominated January’s top markets that favored renting over buying a starter home. In these markets, rents have been making a strong comeback from their 2021 slowdown, partly driven by higher rent growth among studios common to big tech cities than larger units. Still, as first-time buyers face particularly limited inventory and expensive asking prices in big tech cities, renting continues to present a more affordable option. Additionally, for-sale inventory in major tech hubs typically includes a relatively high share of condos, which often come with a hefty HOA fee that can drive up monthly homeownership costs.

  • In January, the monthly cost of buying was 24.8% ($536) higher than the cost of renting in 24 of the 50 largest metros, on average.
  • In the top 10 metros that favored renting, eight of which were among the biggest U.S. tech cities, monthly starter home buying costs payments were 41.6% ($978) higher than rents. For-sale starter homes in these top 10 markets included a higher average share of condos (78%) than the national rate (55%) and pricier HOA fees (at $494 vs. $278).
  • With 76.1% ($1,346) higher monthly starter home buying costs than rents, Austin, Texas topped the January list of markets that favored renting (see table below).
  • At No. 7, Denver had 34.0% higher monthly starter home costs in January, despite significant annual rent growth (+18.7%). With out-of-state home shoppers accounting for more than one-third (35.6%) of Denver traffic, renting could be a relatively affordable alternative for transplant first-time buyers still searching for a home in their budget. January data shows the Denver rental share of income (21.7%) is relatively more affordable than in a city like Los Angeles (45.9%).

“Deciding when to transition from renting to first-time buying is largely dependent on stage of life. For young Americans like Gen Z who may have moved home to save money during COVID, renting in a big tech city offers flexibility and relative affordability even as rents recover in these areas. But for the 45 million millennials at the first-time buying stage of life, priorities may have shifted towards settling down and building wealth,” Hale added. “With mortgage rates getting higher, living somewhere that offers relatively affordable for-sale home options is key, as the general rule of thumb is to not spend more than 30% of your income on housing costs. Renters considering the transition to buying their first home can get a better sense of the financial components by using tools like®‘s Rent Vs. Buy Calculator.”

Top 10 Metro Areas that Favor Renting a Starter Home Over Buying One (Jan. 2022)

RankMetro% Difference
$ Difference (Buy-Rent)Buy Cost per MonthBuy CostY/YMedian Rent per MonthRentY/Y
1Austin, Texas76.1%$1,346$3,11525.7%$1,76931.0%
2New York, N.Y.52.4%$1,415$4,11518.2%$2,7009.1%
3San Francisco, Calif.49.1%$1,461$4,4364.4%$2,97512.0%
4San Jose, Calif.48.3%$1,479$4,54113.4%$3,06214.3%
5Seattle, Wash.39.4%$822$2,908-3.6%$2,08619.5%
6Boston, Mass.37.5%$1,048$3,84317.4%$2,79524.2%
7Denver, Colo.34.0%$645$2,54033.3%$1,89518.7%
8Rochester, N.Y.28.5%$360$1,624-15.0%$1,26410.0%
9Portland, Ore.25.5%$443$2,17613.8%$1,73315.5%
10Los Angeles, Calif.25.5%$760$3,7422.5%$2,98219.5%

January 2022 Rental Metrics – 50 Largest U.S. Metros

Metropolitan Statistical AreaOverall Median RentOverall RentY/YStudio Median RentStudio RentY/Y1-Bed Median Rent1-Bed RentY/Y2-Bed Median Rent2-Bed RentY/Y
Atlanta-Sandy Springs-Roswell, Ga.$1,81421.7%$1,66422.8%$1,68923.3%$2,00320.8%
Austin-Round Rock, Texas$1,76931.0%$1,48534.9%$1,61531.8%$1,93228.0%
Baltimore-Columbia-Towson, Md.$1,77314.4%$1,60028.0%$1,69914.0%$1,87313.5%
Birmingham-Hoover, Ala.$1,20118.6%$1,0663.8%$1,13914.7%$1,26123.0%
Boston-Cambridge-Newton, Mass.-N.H.$2,79524.2%$2,52735.1%$2,60023.8%$3,04021.6%
Buffalo-Cheektowaga-Niagara Falls, N.Y.$1,36523.3%$1,09536.9%$1,22520.1%$1,49015.1%
Charlotte-Concord-Gastonia, N.C.-S.C.$1,61921.8%$1,48924.2%$1,50020.5%$1,75518.3%
Chicago-Naperville-Elgin, Ill.-Ind.-Wis.$1,8009.2%$1,3508.0%$1,80013.8%$1,9955.0%
Cincinnati, Ohio-Ky.-Ind.$1,39513.3%$1,13012.8%$1,35016.2%$1,54915.6%
Cleveland-Elyria, Ohio$1,3259.1%$94615.8%$1,27511.4%$1,4508.2%
Columbus, Ohio$1,24916.1%$1,00912.7%$1,15015.6%$1,37518.0%
Dallas-Fort Worth-Arlington, Texas$1,61524.9%$1,37626.4%$1,47927.4%$1,90025.1%
Denver-Aurora-Lakewood, Colo.$1,89518.7%$1,60418.1%$1,77819.7%$2,17818.5%
Detroit-Warren-Dearborn, Mich.$1,35010.1%$1,0758.6%$1,15012.4%$1,49911.4%
Hartford-West Hartford-East Hartford, Conn.$1,67316.6%$1,41231.0%$1,50010.4%$1,90018.8%
Houston-The Woodlands-Sugar Land, Texas$1,39916.1%$1,26514.6%$1,27416.8%$1,58317.3%
Indianapolis-Carmel-Anderson, Ind.$1,20413.2%$1,03214.7%$1,0948.2%$1,35516.4%
Jacksonville, Fla.$1,61232.1%$1,39068.5%$1,49830.9%$1,74934.5%
Kansas City, Mo.-Kan.$1,22013.6%$99511.2%$1,09014.7%$1,43513.1%
Las Vegas-Henderson-Paradise, Nev.$1,64430.0%$1,22322.9%$1,51031.3%$1,75029.6%
Los Angeles-Long Beach-Anaheim, Calif.$2,98219.5%$2,25023.3%$2,70621.9%$3,45017.1%
Louisville/Jefferson County, Ky.-Ind.$1,20017.1%$1,0008.1%$1,10011.7%$1,37922.6%
Memphis, Tenn.-Miss.-Ark.$1,38526.5%$1,12615.1%$1,34925.7%$1,49930.7%
Miami-Fort Lauderdale-West Palm Beach, Fla.$2,89552.4%$2,37450.7%$2,55550.3%$3,29249.6%
Milwaukee-Waukesha-West Allis, Wis.$1,54512.6%$1,1957.7%$1,4209.7%$1,79515.8%
Minneapolis-St. Paul-Bloomington, Minn.-Wis.$1,5557.2%$1,2114.4%$1,4655.8%$1,8999.8%
Nashville-Davidson–Murfreesboro–Franklin, Tenn.$1,68524.4%$1,63020.3%$1,59524.2%$1,79925.3%
New Orleans-Metairie, La.$1,76317.5%$1,215-2.8%$1,5306.6%$2,00011.4%
New York-Newark-Jersey City, N.Y.-N.J.-Pa.$2,7009.1%$2,43221.6%$2,4856.3%$2,9805.7%
Oklahoma City, Okla.$92311.2%$80016.8%$86514.0%$99511.2%
Orlando-Kissimmee-Sanford, Fla.$1,82034.8%$1,58524.0%$1,69035.2%$2,07044.3%
Philadelphia-Camden-Wilmington, Pa.-N.J.-Del.-Md.$1,77111.0%$1,44014.7%$1,6959.7%$1,9759.7%
Phoenix-Mesa-Scottsdale, Ariz.$1,85527.1%$1,35028.7%$1,61026.8%$2,17026.7%
Pittsburgh, Pa.$1,53018.6%$1,27321.2%$1,51122.0%$1,63014.4%
Portland-Vancouver-Hillsboro, Ore.-Wash.$1,73315.5%$1,42513.1%$1,67515.2%$1,97215.3%
Providence-Warwick, R.I.-Mass.$2,00517.9%$1,70030.8%$1,70510.4%$2,20018.9%
Raleigh, N.C.$1,54523.6%$1,41522.1%$1,42526.1%$1,71024.4%
Richmond, Va.$1,42716.7%$1,19521.3%$1,31117.1%$1,54916.5%
Riverside-San Bernardino-Ontario, Calif.$2,61825.2%$1,52012.6%$2,18525.2%$2,84522.0%
Rochester, N.Y.$1,26410.0%$9151.7%$1,1559.5%$1,39512.0%
Sacramento–Roseville–Arden-Arcade, Calif.$2,06421.6%$1,93922.6%$1,94921.6%$2,19519.4%
San Antonio-New Braunfels, Texas$1,37725.2%$1,21222.5%$1,25124.9%$1,55024.0%
San Diego-Carlsbad, Calif.$3,02531.5%$2,38928.9%$2,75029.1%$3,39530.7%
San Francisco-Oakland-Hayward, Calif.$2,97512.0%$2,41518.2%$2,79613.8%$3,49511.7%
San Jose-Sunnyvale-Santa Clara, Calif.$3,06214.3%$2,46623.3%$2,83415.7%$3,47514.0%
Seattle-Tacoma-Bellevue, Wash.$2,08619.5%$1,72025.5%$2,07021.8%$2,45617.0%
St. Louis, Mo.-Ill.$1,29515.6%$99510.7%$1,23515.9%$1,40414.6%
Tampa-St. Petersburg-Clearwater, Fla.$2,07037.5%$1,92534.1%$1,89140.5%$2,30036.7%
Virginia Beach-Norfolk-Newport News, Va.-N.C.$1,50016.7%$1,25014.7%$1,41013.7%$1,59516.0%
Washington-Arlington-Alexandria, DC-Va.-Md.-W. Va.$2,08512.7%$1,71314.1%$1,98511.8%$2,44412.3%

Rental data as of January 2022 for units advertised as for-rent on®. Rental units include apartment communities as well as private rentals (condos, townhomes, single-family homes). All units were studio, 1-bedroom, or 2-bedroom units. We use communities that reliably report data each month within the top 50 largest metropolitan areas. National rents were calculated by averaging the medians of the 50 largest metropolitan areas.

The monthly cost of buying a home was calculated by averaging the median listing prices of studio, 1-bed, and 2-bed homes, weighted by the number of listings, in each housing market. Memphis for sale data was excluded while inventory data is under review. Monthly buying costs assume a 7% down payment, with a mortgage rate of 3.45%, and include taxes, insurance and HOA fees. Memphis for sale data was excluded while inventory data is under review.

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