Buying Beats Renting in 22 Major U.S. Cities

That’s right—according to a recent study from Zillow, in 22 of the 50 largest metro areas, monthly mortgage payments are now lower than rent payments (see chart below):

As mortgage rates have eased off their recent peak, home prices have moderated, and inventory has ticked up, affordability has improved significantly. When you add all of that up, it’s getting less expensive to buy a home than to rent one in many parts of the country.

This is a big deal if you’ve been renting for a while now. But if you don’t see your city on this list, don’t sweat it. Things are moving fast, and your area might be joining these top metros soon.

You see, talking with a local real estate agent about what’s happening in your market before this happens in your ideal neighborhood could really change the game for you. It’s all about being informed by a true expert, and understanding what was out of reach before might actually be getting more affordable than you think. 

Now, while this study compares monthly rent to principal and interest on a mortgage payment (not the whole monthly payment), let’s think through this. As Zillow notes, what you can’t ignore when you buy a home are things like taxes, insurance, utilities, and maintenance that should also be factored into your budget and your monthly payment.

But remember – renters pay extra fees too, like renters’ insurance, utilities, parking, and more. And while doing the math may feel like a drag, this equation could be a much more exciting one to work through today.

So, grab your calculator and your agent because the big takeaway is this: it may be time to determine if you’re in a spot to afford what you couldn’t just a few months ago.

As Orphe Divounguy, Senior Economist at Zillow, says:

“… for those who can make it work, homeownership may come with lower monthly costs and the ability to build long-term wealth in the form of home equity — something you lose out on as a renter. With mortgage rates dropping, it's a great time to see how your affordability has changed and if it makes more sense to buy than rent.”

Whether you live in one of these budget-friendly metros where the scales have already tipped in your favor, or any town in-between, it’s time to connect with a local real estate agent to get the conversation started.

With mortgage rates coming down and more homes hitting the market, you’ll want to be ready to jump back into your search – before everyone else does.

Bottom Line

If you’re tired of renting and ready to find out what it takes to purchase a home in our area now that the landscape may be shifting, let’s do the math together to see if buying a home makes sense for you now or sometime soon.

Mortgage Rates Down a Full Percent from Recent High

Mortgage rates have been one of the hottest topics in the housing market lately because of their impact on affordability. And if you’re someone who’s looking to make a move, you’ve probably been waiting eagerly for rates to come down for that very reason. Well, if the past few weeks are any indication, you may be getting your wish.

Mortgage Rates Trend Down in Recent Weeks

There’s big news for mortgage rates. After the latest reports on the economy, inflation, the unemployment rate, and the Federal Reserve’s recent comments, mortgage rates started dropping a bit. And according to Freddie Mac, they’re now at a level we haven’t seen since February. To help show the downward trend, check out the graph below:

Maybe you’re seeing this and wondering if you should ride the wave and see how low they’ll go. If that’s the case, here’s some important perspective. Remember, the record-low rates from the pandemic are a thing of the past. If you’re holding out hope to see a 3% mortgage rate again, you’re waiting for something experts agree won’t happen. As Greg McBride, Chief Financial Analyst at Bankrate, says: 

“The hopes for lower interest rates need the reality check that 'lower' doesn't mean we're going back to 3% mortgage rates. . . the best we may be able to hope for over the next year is 5.5 to 6%.”

And with the decrease in recent weeks, you’ve got a big opportunity in front of you right now. It may be enough for you to want to jump back in. 

The Relationship Between Rates and Demand 

If you wait for mortgage rates to drop further, you might find yourself dealing with more competition as other buyers re-ignite their home searches too.

In the housing market, there’s generally a relationship between mortgage rates and buyer demand. Typically, the higher rates are, the lower buyer demand is. But when rates start to come down, things change. Buyers who were on the fence over higher rates will resume their searches. Here’s what that means for you. As a recent article from Bankrate says:

“If you’re ready to buy, now might be the time to strike. Home prices have been rising primarily because of a longstanding shortage of homes for sale. That’s unlikely to change, and if mortgage rates do fall below 6%, it’s possible buyers would enter the market en masse, further pushing up prices and resurrecting bidding wars.”

Bottom Line

If you’ve been waiting to make your move, the recent downward trend in mortgage rates may be enough to get you off the sidelines. Rates have hit their lowest point in months, and that gives you the opportunity to jump back in before all the other buyers do too.

If you’re ready and able to start the process, reach out and let’s get started.