Realtor.com® December Rental Report: Renting Costs Nearly $800 Less Per Month than Buying
The top markets with the largest savings for renters include: Austin, Texas (121.3% savings), San Francisco (97.0% savings) and Seattle (86.1% savings)
SANTA CLARA, Calif., Jan. 26, 2023 /PRNewswire/ -- For many Americans hoping to make the transition to first-time buying in 2023, renting will likely offer relatively more affordable options in the months ahead, according to the Realtor.com® Monthly Rental Report released today. On average across the 50 largest U.S. metros in December, a typical renter faced a 41.4% ($792) lower monthly payment than a starter homeowner.1
The markets with the largest monthly savings for renters, ranked by the percent difference between monthly mortgage payments and asking rents, include:
- Austin, Texas (121.3% or $2,013)
- San Francisco, Calif. (97.0% or $2,855)
- Seattle, Wash. (86.1% or $1,772)
- San Jose, Calif. (83.0% or $2,621)
- San Diego, Calif. (77.2% or $2,085)
- Los Angeles, Calif. (74.9% or $2,150)
- Boston, Mass. (73.1% or $2,097)
- Portland, Ore. (71.2% or $1,246)
- Phoenix, Ariz. (70.1% or $1,116)
- Sacramento, Calif (67.7% or $1,241)
"Despite the fact that renting will likely be cheaper than buying in 2023, rental affordability will remain a key issue throughout the year. We expect rents will keep hitting new highs, driven by factors including still-low vacancy rates, lagging new construction and demand from would-be first-time buyers," said Realtor.com® Chief Economist Danielle Hale. "For prospective first-time buyers, the key consideration when figuring out whether to buy or rent is how long you plan to live in your next home. If you're looking for flexibility to move in the shorter term, renting may be your best bet, and still offer opportunities to save if you're able to compromise on factors like proximity to the downtown area. Whereas buying could be the better option if you're planning to stay put for at least five years. Market conditions will play a role, but ultimately the timing comes down to your personal situation, and tools like the Realtor.com® Rent vs. Buy Calculator can help you organize and make sense of the many considerations."
In December, renters faced lower monthly costs than first-time buyers, on average across the 50 largest U.S. metros and in the vast majority (45) of these markets. Additionally, the gap between the cost of renting and buying a similar-sized home widened significantly compared to December 2021. While this was partly attributed to the slowdown in rent growth seen over the past year, December trends indicate that the increase in relative rental affordability was primarily driven by skyrocketing mortgage rates.
- In December, the U.S. median rental price, $1,712, was $792 lower than a typical monthly starter home payment. Just 12 months ago, the difference was -$174.
- The widening gap between rents and first-time buying costs is largely attributed to higher starter homeownership monthly costs ($2,504), which grew 37.4% year-over-year in December – more than 10 times faster than rents (+3.2%) during the same period. Furthermore, despite the slowdown in year-over-year rent growth seen in recent months, typical asking rents ended the year up an average of 11.6% year-over-year.
- Renting was more affordable than first-time buying in 45 of the 50 largest markets in December, up from 30 markets at the same time last year. In the top 10 metros that favored renting over first-time buying (see table below), monthly starter homeownership costs were an average of 82.2% (+$1,920) higher than rents.
- Just five markets favored starter homeownership over renting in December, in terms of offering lower monthly costs; these were: Memphis, Tenn. (-32.7%), Pittsburgh (-24.1%), Birmingham, Ala. (-23.5%), St. Louis, Mo. (-6.9%) and Baltimore, Md. (-3.7%).
December & Full-Year 2022 Rental Metrics – National
Unit Size |
Dec. 2022 |
Dec. 2022 Median Rent, |
Full-Year 2022 Avg. YY |
Overall |
$1,712 |
3.2 % |
11.6 % |
Studio |
$1,448 |
4.7 % |
13.2 % |
1-bed |
$1,589 |
2.9 % |
11.3 % |
2-bed |
$1,874 |
2.4 % |
10.9 % |
December & Full-Year 2022 Rental Metrics – 50 Largest U.S. Metro Areas
Ranked by % difference between rents and monthly starter home payments
Rank |
Metro Area |
December 2022 |
Full- |
|||||
Buy-Rent |
Buy-Rent |
Overall |
Overall YY |
Monthly |
Monthly |
Overall |
||
1 |
121.3 % |
$2,013 |
$1,659 |
-0.7 % |
$3,672 |
31.1 % |
9.2 % |
|
2 |
97.0 % |
$2,855 |
$2,943 |
3.4 % |
$5,798 |
34.7 % |
9.3 % |
|
3 |
86.1 % |
$1,772 |
$2,059 |
1.2 % |
$3,831 |
57.3 % |
11.0 % |
|
4 |
83.0 % |
$2,621 |
$3,156 |
5.9 % |
$5,777 |
39.6 % |
13.7 % |
|
5 |
77.2 % |
$2,085 |
$2,702 |
1.2 % |
$4,787 |
51.3 % |
15.7 % |
|
6 |
74.9 % |
$2,150 |
$2,870 |
2.3 % |
$5,020 |
37.7 % |
13.0 % |
|
7 |
73.1 % |
$2,097 |
$2,868 |
6.4 % |
$4,965 |
32.8 % |
19.8 % |
|
8 |
71.2 % |
$1,246 |
$1,750 |
4.7 % |
$2,996 |
34.8 % |
9.1 % |
|
9 |
70.1 % |
$1,116 |
$1,592 |
-3.3 % |
$2,708 |
36.6 % |
10.4 % |
|
10 |
67.7 % |
$1,241 |
$1,834 |
-4.2 % |
$3,075 |
32.9 % |
5.2 % |
|
11 |
66.4 % |
$887 |
$1,335 |
4.5 % |
$2,222 |
41.7 % |
8.7 % |
|
12 |
66.1 % |
$1,024 |
$1,549 |
6.7 % |
$2,573 |
71.5 % |
8.6 % |
|
13 |
63.5 % |
$1,207 |
$1,902 |
0.8 % |
$3,109 |
27.2 % |
9.0 % |
|
14 |
62.4 % |
$853 |
$1,368 |
1.7 % |
$2,221 |
31.7 % |
8.7 % |
|
15 |
57.2 % |
$895 |
$1,564 |
3.4 % |
$2,459 |
27.1 % |
14.1 % |
|
16 |
57.0 % |
$913 |
$1,602 |
2.5 % |
$2,515 |
32.0 % |
14.3 % |
|
17 |
57.0 % |
$1,537 |
$2,698 |
12.2 % |
$4,235 |
10.2 % |
15.4 % |
|
18 |
55.3 % |
$684 |
$1,237 |
5.4 % |
$1,921 |
34.4 % |
9.4 % |
|
19 |
54.6 % |
$817 |
$1,495 |
-4.5 % |
$2,312 |
34.0 % |
11.9 % |
|
20 |
53.4 % |
$691 |
$1,294 |
3.6 % |
$1,985 |
41.1 % |
13.7 % |
|
21 |
52.2 % |
$739 |
$1,417 |
-0.7 % |
$2,156 |
11.7 % |
7.7 % |
|
22 |
50.8 % |
$776 |
$1,527 |
2.5 % |
$2,303 |
37.9 % |
3.8 % |
|
23 |
50.7 % |
$1,066 |
$2,103 |
3.7 % |
$3,169 |
35.0 % |
9.3 % |
|
24 |
45.5 % |
$927 |
$2,037 |
-6.0 % |
$2,964 |
50.7 % |
6.0 % |
|
25 |
44.4 % |
$657 |
$1,479 |
1.6 % |
$2,136 |
60.8 % |
13.3 % |
|
26 |
42.0 % |
$646 |
$1,537 |
2.3 % |
$2,183 |
29.6 % |
14.0 % |
|
27 |
37.4 % |
$473 |
$1,265 |
7.0 % |
$1,738 |
42.2 % |
8.5 % |
|
28 |
37.3 % |
$771 |
$2,067 |
6.7 % |
$2,838 |
39.2 % |
17.3 % |
|
29 |
37.2 % |
$442 |
$1,188 |
2.3 % |
$1,630 |
25.5 % |
6.7 % |
|
30 |
35.6 % |
$487 |
$1,368 |
6.2 % |
$1,855 |
38.3 % |
12.1 % |
|
31 |
34.0 % |
$567 |
$1,669 |
-1.7 % |
$2,236 |
35.6 % |
14.9 % |
|
32 |
32.2 % |
$567 |
$1,760 |
-4.3 % |
$2,327 |
50.7 % |
14.4 % |
|
33 |
31.5 % |
$846 |
$2,682 |
4.7 % |
$3,528 |
40.3 % |
29.9 % |
|
34 |
27.4 % |
$465 |
$1,697 |
0.4 % |
$2,162 |
36.5 % |
6.8 % |
|
35 |
25.8 % |
$245 |
$950 |
9.6 % |
$1,195 |
25.8 % |
11.2 % |
|
36 |
24.3 % |
$421 |
$1,730 |
7.5 % |
$2,151 |
37.8 % |
10.2 % |
|
37 |
22.8 % |
$250 |
$1,097 |
4.3 % |
$1,347 |
46.9 % |
10.4 % |
|
38 |
21.5 % |
$343 |
$1,592 |
2.3 % |
$1,935 |
45.9 % |
12.9 % |
|
39 |
18.2 % |
$359 |
$1,968 |
17.5 % |
$2,327 |
33.7 % |
16.5 % |
|
40 |
15.2 % |
$218 |
$1,432 |
2.4 % |
$1,650 |
49.6 % |
9.0 % |
|
41 |
13.5 % |
$166 |
$1,227 |
5.8 % |
$1,393 |
30.4 % |
6.7 % |
|
42 |
13.1 % |
$151 |
$1,152 |
5.0 % |
$1,303 |
32.8 % |
8.2 % |
|
43 |
11.7 % |
$212 |
$1,812 |
4.0 % |
$2,024 |
53.8 % |
20.5 % |
|
44 |
10.9 % |
$140 |
$1,288 |
8.0 % |
$1,428 |
39.2 % |
10.5 % |
|
45 |
9.9 % |
$125 |
$1,269 |
9.4 % |
$1,394 |
44.0 % |
10.2 % |
|
46 |
-3.7 % |
-$65 |
$1,749 |
2.6 % |
$1,684 |
25.4 % |
8.4 % |
|
47 |
-6.9 % |
-$83 |
$1,211 |
2.7 % |
$1,128 |
34.1 % |
7.1 % |
|
48 |
-23.5 % |
-$270 |
$1,149 |
3.6 % |
$879 |
19.1 % |
7.8 % |
|
49 |
-24.1 % |
-$348 |
$1,445 |
4.5 % |
$1,097 |
21.2 % |
7.2 % |
|
50 |
-32.7 % |
-$411 |
$1,258 |
0.3 % |
$847 |
58.3 % |
12.4 % |
|
Methodology
Rental data as of December 2022 for units advertised as for-rent on Realtor.com®. Rental units include apartment communities as well as private rentals (condos, townhomes, single-family homes). All units were studio, 1-bedroom, or 2-bedroom units. National rents were calculated by averaging the medians of the 50 largest U.S. metropolitan areas, as defined by the Office of Management and Budget (OMB). Realtor.com® began publishing regular monthly rental trends reports in October 2020 with data history going back to March 2019.
The monthly cost of buying a starter home, also referred to in this release as first-time buying, was calculated by averaging the December median listing prices of studio, 1-bed, and 2-bed homes, weighted by the number of listings, in each housing market (average across the 50 largest U.S. metros: $318,697). Monthly buying costs assume a 7% down payment, with a mortgage rate of 6.36%, and include taxes, insurance and HOA fees.
About Realtor.com®
Realtor.com® is an open real estate marketplace built for everyone. Realtor.com® pioneered the world of digital real estate more than 25 years ago. Today, through its website and mobile apps, Realtor.com® is a trusted guide for consumers, empowering more people to find their way home by breaking down barriers, helping them make the right connections, and creating confidence through expert insights and guidance. For professionals, Realtor.com® is a trusted partner for business growth, offering consumer connections and branding solutions that help them succeed in today's on-demand world. Realtor.com® is operated by News Corp [Nasdaq: NWS, NWSA] [ASX: NWS, NWSLV] subsidiary Move, Inc. For more information, visit Realtor.com®.
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1 See methodology for rent vs. buy calculation details.
SOURCE Realtor.com
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