Median US rental price up 19.8% year-over-year to US$1,789 in January, 20.6% higher than monthly starter home payments in 26 of 50 largest metros; rents expected to outpace listing price growth in 2022, already advancing across all unit sizes: Realtor.com

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SANTA CLARA, California , February 22, 2022 (press release) –

The U.S. median rental price surged 19.8% year-over-year in January, outpacing monthly starter homeownership costs in the majority of large markets despite competitive buying conditions

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 Realtor.com® 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).

"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 Realtor.com® 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."

January 2022 Rental Metrics – National

Unit Size

Median Rent

Change over Jan. 2021

Change over Jan. 2020

Overall

$1,789

19.8%

21.0%

Studio

$1,476

21.0%

14.6%

1-bed

$1,652

19.2%

20.2%

2-bed

$2,000

19.2%

23.8%

 

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)

Rank

Metro

% Difference (Buy-Rent)

$ Difference (Buy-Rent)

Buy Cost per Month

Buy Cost

Y/Y

Median Rent per Month

Rent

Y/Y

1

Birmingham, Ala.

-44.3%

-$533

$668

-5.9%

$1,201

18.6%

2

Cleveland, Ohio

-38.9%

-$516

$809

13.5%

$1,325

9.1%

3

Pittsburgh, Penn.

-38.3%

-$585

$945

3.2%

$1,530

18.6%

4

St. Louis, Mo.

-37.3%

-$483

$812

16.2%

$1,295

19.5%

5

Detroit, Mich.

-33.3%

-$449

$901

-10.1%

$1,350

10.1%

6

Baltimore, Md.

-30.0%

-$531

$1,242

5.2%

$1,773

14.4%

7

Virginia Beach, Va.

-27.2%

-$409

$1,091

14.6%

$1,500

16.7%

8

Orlando, Fla.

-27.1%

-$493

$1,327

21.8%

$1,820

34.8%

9

Tampa, Fla.

-25.5%

-$527

$1,543

27.3%

$2,070

37.5%

10

Louisville, Ky.

-23.7%

-$284

$916

8.5%

$1,200

17.1%

 

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 Realtor.com®'s Rent Vs. Buy Calculator."

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

Rank

Metro

% Difference
(Buy-Rent)

$ Difference (Buy-Rent)

Buy Cost per Month

Buy Cost

Y/Y

Median Rent per Month

Rent

Y/Y

1

Austin, Texas

76.1%

$1,346

$3,115

25.7%

$1,769

31.0%

2

New York, N.Y.

52.4%

$1,415

$4,115

18.2%

$2,700

9.1%

3

San Francisco, Calif.

49.1%

$1,461

$4,436

4.4%

$2,975

12.0%

4

San Jose, Calif.

48.3%

$1,479

$4,541

13.4%

$3,062

14.3%

5

Seattle, Wash.

39.4%

$822

$2,908

-3.6%

$2,086

19.5%

6

Boston, Mass.

37.5%

$1,048

$3,843

17.4%

$2,795

24.2%

7

Denver, Colo.

34.0%

$645

$2,540

33.3%

$1,895

18.7%

8

Rochester, N.Y.

28.5%

$360

$1,624

-15.0%

$1,264

10.0%

9

Portland, Ore.

25.5%

$443

$2,176

13.8%

$1,733

15.5%

10

Los Angeles, Calif.

25.5%

$760

$3,742

2.5%

$2,982

19.5%

 

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

Metropolitan Statistical Area

Overall Median Rent

Overall Rent

Y/Y

Studio Median Rent

Studio Rent

Y/Y

1-Bed Median Rent

1-Bed Rent

Y/Y

2-Bed Median Rent

2-Bed Rent

Y/Y

Atlanta-Sandy Springs-Roswell, Ga.

$1,814

21.7%

$1,664

22.8%

$1,689

23.3%

$2,003

20.8%

Austin-Round Rock, Texas

$1,769

31.0%

$1,485

34.9%

$1,615

31.8%

$1,932

28.0%

Baltimore-Columbia-Towson, Md.

$1,773

14.4%

$1,600

28.0%

$1,699

14.0%

$1,873

13.5%

Birmingham-Hoover, Ala.

$1,201

18.6%

$1,066

3.8%

$1,139

14.7%

$1,261

23.0%

Boston-Cambridge-Newton, Mass.-N.H.

$2,795

24.2%

$2,527

35.1%

$2,600

23.8%

$3,040

21.6%

Buffalo-Cheektowaga-Niagara Falls, N.Y.

$1,365

23.3%

$1,095

36.9%

$1,225

20.1%

$1,490

15.1%

Charlotte-Concord-Gastonia, N.C.-S.C.

$1,619

21.8%

$1,489

24.2%

$1,500

20.5%

$1,755

18.3%

Chicago-Naperville-Elgin, Ill.-Ind.-Wis.

$1,800

9.2%

$1,350

8.0%

$1,800

13.8%

$1,995

5.0%

Cincinnati, Ohio-Ky.-Ind.

$1,395

13.3%

$1,130

12.8%

$1,350

16.2%

$1,549

15.6%

Cleveland-Elyria, Ohio

$1,325

9.1%

$946

15.8%

$1,275

11.4%

$1,450

8.2%

Columbus, Ohio

$1,249

16.1%

$1,009

12.7%

$1,150

15.6%

$1,375

18.0%

Dallas-Fort Worth-Arlington, Texas

$1,615

24.9%

$1,376

26.4%

$1,479

27.4%

$1,900

25.1%

Denver-Aurora-Lakewood, Colo.

$1,895

18.7%

$1,604

18.1%

$1,778

19.7%

$2,178

18.5%

Detroit-Warren-Dearborn, Mich.

$1,350

10.1%

$1,075

8.6%

$1,150

12.4%

$1,499

11.4%

Hartford-West Hartford-East Hartford, Conn.

$1,673

16.6%

$1,412

31.0%

$1,500

10.4%

$1,900

18.8%

Houston-The Woodlands-Sugar Land, Texas

$1,399

16.1%

$1,265

14.6%

$1,274

16.8%

$1,583

17.3%

Indianapolis-Carmel-Anderson, Ind.

$1,204

13.2%

$1,032

14.7%

$1,094

8.2%

$1,355

16.4%

Jacksonville, Fla.

$1,612

32.1%

$1,390

68.5%

$1,498

30.9%

$1,749

34.5%

Kansas City, Mo.-Kan.

$1,220

13.6%

$995

11.2%

$1,090

14.7%

$1,435

13.1%

Las Vegas-Henderson-Paradise, Nev.

$1,644

30.0%

$1,223

22.9%

$1,510

31.3%

$1,750

29.6%

Los Angeles-Long Beach-Anaheim, Calif.

$2,982

19.5%

$2,250

23.3%

$2,706

21.9%

$3,450

17.1%

Louisville/Jefferson County, Ky.-Ind.

$1,200

17.1%

$1,000

8.1%

$1,100

11.7%

$1,379

22.6%

Memphis, Tenn.-Miss.-Ark.

$1,385

26.5%

$1,126

15.1%

$1,349

25.7%

$1,499

30.7%

Miami-Fort Lauderdale-West Palm Beach, Fla.

$2,895

52.4%

$2,374

50.7%

$2,555

50.3%

$3,292

49.6%

Milwaukee-Waukesha-West Allis, Wis.

$1,545

12.6%

$1,195

7.7%

$1,420

9.7%

$1,795

15.8%

Minneapolis-St. Paul-Bloomington, Minn.-Wis.

$1,555

7.2%

$1,211

4.4%

$1,465

5.8%

$1,899

9.8%

Nashville-Davidson--Murfreesboro--Franklin, Tenn.

$1,685

24.4%

$1,630

20.3%

$1,595

24.2%

$1,799

25.3%

New Orleans-Metairie, La.

$1,763

17.5%

$1,215

-2.8%

$1,530

6.6%

$2,000

11.4%

New York-Newark-Jersey City, N.Y.-N.J.-Pa.

$2,700

9.1%

$2,432

21.6%

$2,485

6.3%

$2,980

5.7%

Oklahoma City, Okla.

$923

11.2%

$800

16.8%

$865

14.0%

$995

11.2%

Orlando-Kissimmee-Sanford, Fla.

$1,820

34.8%

$1,585

24.0%

$1,690

35.2%

$2,070

44.3%

Philadelphia-Camden-Wilmington, Pa.-N.J.-Del.-Md.

$1,771

11.0%

$1,440

14.7%

$1,695

9.7%

$1,975

9.7%

Phoenix-Mesa-Scottsdale, Ariz.

$1,855

27.1%

$1,350

28.7%

$1,610

26.8%

$2,170

26.7%

Pittsburgh, Pa.

$1,530

18.6%

$1,273

21.2%

$1,511

22.0%

$1,630

14.4%

Portland-Vancouver-Hillsboro, Ore.-Wash.

$1,733

15.5%

$1,425

13.1%

$1,675

15.2%

$1,972

15.3%

Providence-Warwick, R.I.-Mass.

$2,005

17.9%

$1,700

30.8%

$1,705

10.4%

$2,200

18.9%

Raleigh, N.C.

$1,545

23.6%

$1,415

22.1%

$1,425

26.1%

$1,710

24.4%

Richmond, Va.

$1,427

16.7%

$1,195

21.3%

$1,311

17.1%

$1,549

16.5%

Riverside-San Bernardino-Ontario, Calif.

$2,618

25.2%

$1,520

12.6%

$2,185

25.2%

$2,845

22.0%

Rochester, N.Y.

$1,264

10.0%

$915

1.7%

$1,155

9.5%

$1,395

12.0%

Sacramento--Roseville--Arden-Arcade, Calif.

$2,064

21.6%

$1,939

22.6%

$1,949

21.6%

$2,195

19.4%

San Antonio-New Braunfels, Texas

$1,377

25.2%

$1,212

22.5%

$1,251

24.9%

$1,550

24.0%

San Diego-Carlsbad, Calif.

$3,025

31.5%

$2,389

28.9%

$2,750

29.1%

$3,395

30.7%

San Francisco-Oakland-Hayward, Calif.

$2,975

12.0%

$2,415

18.2%

$2,796

13.8%

$3,495

11.7%

San Jose-Sunnyvale-Santa Clara, Calif.

$3,062

14.3%

$2,466

23.3%

$2,834

15.7%

$3,475

14.0%

Seattle-Tacoma-Bellevue, Wash.

$2,086

19.5%

$1,720

25.5%

$2,070

21.8%

$2,456

17.0%

St. Louis, Mo.-Ill.

$1,295

15.6%

$995

10.7%

$1,235

15.9%

$1,404

14.6%

Tampa-St. Petersburg-Clearwater, Fla.

$2,070

37.5%

$1,925

34.1%

$1,891

40.5%

$2,300

36.7%

Virginia Beach-Norfolk-Newport News, Va.-N.C.

$1,500

16.7%

$1,250

14.7%

$1,410

13.7%

$1,595

16.0%

Washington-Arlington-Alexandria, DC-Va.-Md.-W. Va.

$2,085

12.7%

$1,713

14.1%

$1,985

11.8%

$2,444

12.3%

 

Methodology
Rental data as of January 2022 for units advertised as for-rent on Realtor.com®. 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.

Please note: With the release of its January 2022 Rental Report, Realtor.com® incorporated a new and improved methodology for capturing and reporting rental listing trends and metrics. As a result of these changes, this release is not directly comparable with previous Realtor.com® data releases and reports. However, future Realtor.com® data releases, including historical data, will consistently apply the new methodology. See more details here.

About Realtor.com®
Realtor.com® makes buying, selling, renting and living in homes easier and more rewarding for everyone. Realtor.com® pioneered the world of digital real estate more than 25 years ago, and today through its website and mobile apps offers a marketplace where people can learn about their options, trust in the transparency of information provided to them, and get services and resources that are personalized to their needs. Using proprietary data science and machine learning technology, Realtor.com® pairs buyers and sellers with local agents in their market, helping take the guesswork out of buying and selling a home. For professionals, Realtor.com® is a trusted provider of consumer connections and branding solutions that help them succeed in today's on-demand world. Realtor.com® is operated by News Corp [Nasdaq: NWS, NWSA] [ASX: NWS, NWSLV] subsidiary Move, Inc. For more information, visit Realtor.com®.

Media Contact
rachel.conner@move.com 

1 See methodology below for a detailed breakdown of monthly starter home buying costs.

SOURCE Realtor.com

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