Renting more expensive than buying in most US metro areas

Renters spend 30 percent of income on monthly charge; buyers fork out half that on mortgages

TRD New York /
Sep.September 02, 2014 08:00 AM

Buying is becoming a better bargain than renting in many metropolitan areas in the U.S., according to a new report.

In 94 of the nation’s 100 biggest metros, renting is proving more costly than buying, according to a Zillow report. Unlike the housing market, rentals did not suffer a large drop in prices following the financial crisis, and so rental rates have steadily trended upwards. Renters, the study found, spend 29.5 percent of their income on rent on average, compared to buyers who spent 15.3 percent on their income on home mortgages.

“As rents keep rising, along with interest rates and home values, saving for a down payment and attaining home ownership becomes that much more difficult for millions of current renters, particularly millennial renters already saddled with uncertain job prospects and enormous student debt,” Stan Humphries, Zillow chief economist, said in a statement. “In order to combat this phenomenon, wages need to grow more quickly than they are, particularly for renters, and growth in home values will need to slow.”

Another rent increase driver is a recent uptick in the number of all-cash home buyers. In the second quarter of 2014, 38 percent of all sales were cash purchases — although that’s down from 42 percent during the first quarter. Then again, all-cash buys during the first three months of the year hit a level not seen in three years. [Main St.] Julie Strickland


Related Articles

arrow_forward_ios
The number of closed sales fell by more than 14 percent year over year in the third quarter (Credit: iStock)

Low mortgage rates are killing Manhattan’s all-cash buyer

The massive meeting held in a suburban casino outside of Utica came at a time when the real estate industry is asking itself some tough questions. (Credit: iStock)

Meet the 400 landlords that are taking rent laws into their own hands

Olivia Gamber, the farmer-in-residence at Staten Island Urby’s Rabbit Garden

The Staten Island rental that’s luring in renters with tomatoes and hot peppers

(Credit: iStock)

Despite housing market slowdown, mortgage lenders just had a great second quarter

The Daily Dirt: The dark cloud hanging over buyers

Trump proposal would make getting a mortgage harder for homeowners deep in debt

Everything you need to know about Realogy and Amazon’s TurnKey partnership

Almost 40% of homes in the US are
mortgage-free

arrow_forward_ios