Should you rent or buy? That question has become increasingly difficult to answer over the last year as home prices have soared and rents in major metropolitan areas tumbled as residents escaped strict pandemic lockdowns.
In all 50 of the country’s largest metropolitan areas, the monthly cost of renting is lower than a mortgage payment, according to a recent study by Lending Tree, an online financial marketplace.
The biggest gap nationally is unsurprisingly in cities such as New York, Los Angeles and San Francisco, where the difference between a mortgage payment and rent is over $1,000 a month. The gap in the Big Apple is $1,363.
The gap in the 17 Southern cities on the list is far lower but not insignificant.
In the Texas cities of Austin, Dallas and Houston, a renter can expect to save around $600 a month over the cost of a mortgage. In Virginia Beach and New Orleans, the figure drops to around $500 a month.
While the cost of a home has been increasing steadily over the last five years, prices gained new momentum at the start of the pandemic, according to Federal Housing Finance Agency data. Home prices were up about 25% between March 2016 and March 2020. A year later, the average home is now worth 45% more than it was five years ago.
That rapid increase has been in part because of a decline in the nation’s available housing stock. Subsequently, home prices have increased by percentages that rival the housing bubble of 2007.
Of course, there are lucrative financial and personal benefits of owning a home that some may see as worth the extra payment. Buying can be a very profitable long-term investment that comes with tax benefits. You also don’t have to worry about being asked to leave by a landlord.
On the other hand, renting doesn’t require an enormous down payment or routine maintenance of a home. It also makes it easier for people to move to different places. That may be helpful for some as employers warm to their employees working from home.