Cheaper to buy than rent in Houston
One of four U.S. cities where buying a house is cheaper than renting one
Houston, we have a solution: buy, don’t rent.
Houston is one of only four cities in the United States where it is cheaper to buy a single-family home than rent one, according to Redfin. Philadelphia, Cleveland and Detroit are the other three.
The website compared March median monthly rent prices of single-family homes to house payments, calculated with the assumption of a 5 percent down payment and 6.5 percent mortgage rate. In Houston, they were almost equal, with a 1 percent difference between mortgage and rent payments.
The median monthly single-family rent in Houston was $2,371, and the median monthly mortgage payment was $2,343.
“I can look in League City, Katy, Sugar Land, or I can look in Cypress and find places in the low $200s,” said Daniela Sumbera of Keller Williams Northeast’s Sumbera Team. “You can find rentals for about $2,000. Obviously, they’ll be more expensive in the inner city, but you can still own in the suburbs.”
Stagnant home prices are contributing to affordability, the report found. Home affordability has become a problem across the country, with the national median home price increasing 131 months in a row, according to the National Association of Realtors. However, they dropped in February and March by almost one percentage point.
Houston saw a different trend. Median home prices in Greater Houston increased one-third of a percent year-over-over from $339,900 to $340,000 in April, and the market has remained stable.
“We didn’t have a big housing bubble where our prices just increased dramatically in a short period of time. Prices have always increased slightly,” said Cathy Treviño, Houston Association of Realtors chairwoman. “This is a good thing, because then when the market shifts, you don’t have a sharp decline like Austin, where their home prices rose dramatically in a short period of time, and now they’re seeing the prices of homes declining just as dramatically.”
Increased demand in the rental market could be another trend to blame for the relative surge in rental costs, as would-be homebuyers increasingly opt to wait out interest rate hikes, which reached a 16-year high of over 5 percent this month. It’s simple supply and demand, Treviño said. As the supply of available homes has decreased, the rental market has seen a boom in attention and price.
“The rental market is definitely our sweet spot right now, because consumers are still having a little bit of scarcity, just kind of watching the market to see what will happen, as interest rate hikes have priced some people out,” Treviño said.
Relatively low housing inventory in Greater Houston is also a factor. Pre-pandemic, the inventory of homes stood at 25,000. However, the current figure hovers at 17,000, higher than last year’s numbers but remaining historically low. Prospective buyers are choosing to rent as they not only wait out interest rate hikes but also await their dream home to come on the market, Treviño said.
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