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Boston makes top 10 list of better-off-renting metros
Realtor.com: Nationally, the cost gap between renting and buying increased from $611 in August 2022 to $1,111 in August 2023.
As mortgage rates skyrocket to the highest point in nearly 23 years, sellers sit on the sidelines, and home buyers battle over the few listings that do hit the market, renters are asking themselves: Is it more economical to keep on renting?
It’s an age-old question — one that takes on even more importance in the current climate.
“In August 2023, the cost of buying a starter home in the top 50 metros was $1,111 (60.3%) higher than renting one,” Realtor.com said in a report the real estate marketplace released Sept. 21. The report also suggested that renting is more affordable than buying a starter home in 47 of the country’s 50 largest metros.
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Baltimore and St. Louis were the two metros that flipped from buy-favoring to rent-favoring markets over the past 12 months. The top metros that favor buying over renting were Memphis, Pittsburgh, and Birmingham-Hoover, Alabama.
Realtor.com said the cost gap between renting and buying increased from $611 in August 2022 to $1,111 in August 2023. The researchers attributed the widening gap to the following:
| Factor | change |
|---|---|
| Declining cost of renting | $11 |
| Climbing home prices | $114 |
| Mortgage rate jumps | $356 |
| Combined listing/mortgage rate effect | $19 |
Looking at the top 10 metros in which it is more favorable to rent than buy (in August 2023), it’s no surprise that the West Coast took up many of the slots:
| Rank | Metro | median rent | monthly buy cost | $ difference (Buy-rent) |
|---|---|---|---|---|
| 1. | Austin-Round Rock-Georgetown, Texas | $1,670 | $3,946 | $2,276 |
| 2. | San Francisco-Oakland-Berkeley, Calif. | $2,906 | $5,859 | $2,953 |
| 3. | Columbus, Ohio | $1,222 | $2,458 | $1,236 |
| 4. | Sacramento-Roseville-Folsom, Calif. | $1,898 | $3,779 | $1,881 |
| 5. | Los Angeles-Long Beach-Anaheim, Calif. | $2,892 | $5,672 | $2,780 |
| 6. | San Jose-Sunnyvale-Santa Clara, Calif. | $3,367 | $6,581 | $3,214 |
| 7. | Portland-Vancouver-Hillsboro, Ore.-Wash. | $1,709 | $3,314 | $1,605 |
| 8. | Boston-Cambridge-Newton-southern N.H. | $2,851 | $5,526 | $2,675 |
| 9. | Seattle-Tacoma-Bellevue, Wash. | $2,168 | $4,156 | $1,988 |
| 10. | Phoenix-Mesa-Chandler, Ariz. | $1,595 | $3,015 | $1,420 |
The study looked at rental data as of August for studio, one-bedroom, and two-bedroom units advertised on Realtor.com. It calculated the monthly cost of buying a home averaging the median listing prices of studio, one-bedroom, and two-bedroom homes, weighted by the number of listings, in each housing market. Monthly buying costs assume a 7% down payment, with a mortgage rate of 7.07%, and include taxes, insurance, and homeowners association fees.
The study suggested that the average cost to rent in metro Boston increased by 3.2% year over year, while the average cost to buy a starter home here jumped 24.4%.
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