Plumbing

Cheaper to purchase a house than lease? Solely in these 4 main metros: research

(NEXSTAR) – Rental costs have skyrocketed across the country in recent years, but could it actually be more affordable to buy a home in 2023?

Among major U.S. metropolitan areas, there are only four where you could actually save money every month by buying a home instead of paying rent, a study by real estate broker Redfin found.

With mortgage rates at their highest in decades, it might come as a surprise that any major US metropolitan area could actually be cheaper for buyers. These four outliers are Houston, Cleveland, Philadelphia, and Detroit.

According to Redfin, the biggest discount is in Detroit, where buying a typical home is 24% cheaper than renting it. The Motor City is followed by Philadelphia (7%), Cleveland (4%) and Houston (1%).

In the rest of the country, the balance is in the tenant’s favour, with tenants receiving an average discount of 25% per month.

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In expensive California cities like San Francisco and San Jose, owning a home is a whopping 139% and 165% more expensive than renting, respectively. The study, which used a 6.5% mortgage rate and analyzed single-family homes, condos/cooperatives and townhouses, found that cities that have become pandemic darlings also have almost no shortage of homes that are cheaper to buy is than the rent. It’s just 1 percent in Sacramento, Phoenix, and Las Vegas, while it’s 5 percent in Austin.

So what’s the incentive to buy in the notoriously tight real estate markets?

“Buying a home often makes more financial sense than renting when you can afford a down payment and a monthly mortgage because you’re building equity,” said Taylor Marr, Redfin’s deputy chief economist. “If you own a home, your home will pay you; When you rent, you and your house pay your landlord.”

However, Marr acknowledged that a purchase isn’t feasible for everyone, especially people who move regularly or don’t have the cash to pay a down payment at such high rates.

So are people buying houses? According to the National Association of Realtors, April’s pending home sales were flat overall, with numbers down 11.3% in the Northeast but down 4.7%, 3.6% and 0% in the West, Midwest and South, respectively. 01% increased.

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