Buying costs $1,000 more per month than renting

Ownership premium up 17% from last year: John Burns

Home Mortgage Costs $1,000 More Per Month Than Renting
(Illustration by The Real Deal/Getty)

The gap between renters and buyers is growing — in favor of the renters.

The monthly premium on home ownership is up to $1,030 per month, according to the latest report from John Burns Real Estate Consulting. That’s up 17 percent from this month last year, when the difference favored renters by $884 per month.

Both the housing and rental markets surged during the pandemic Rents have shown some signs of peaking, however, while home prices remain high and mortgage rates are still significantly higher than they were 15 months ago, when the Federal Reserve started hiking interest rates.

The thousand-dollar threshold is significant, but things have been worse for buyers. The peak came in October, when the premium favored renters by $1,188 per month. 

Renting has been historically cheaper than buying, as the latter includes an expensive down payment — even when spread over decades — and owners typically front the costs for repair and maintenance, unlike renters. After the 2008 Great Recession, however, buyers briefly held the upper hand.

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In 20 of the most populous markets analyzed by John Burns, renters held the advantage in every single one. The size of that advantage differed greatly from market to market, though, especially in the Midwest.

Austin was most unforgiving to owners when compared to renters of a single-family starting home. It costs $1,664 more to own than rent per month in Texas’ capital. Ownership premiums above the national mark were also recorded in Denver, Miami and Dallas.

On the other side of the spectrum, the gap was the closest in Indianapolis, where renters only held a $117 monthly advantage. The only other market where the gap was within $200 was Cincinnati.

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