Renting Is Officially Cheaper Than Buying

Buying a home is now more expensive than renting one in America’s 50 largest metropolitan areas. This might be good news for renters, but it also brings up an important aspect of homebuying: It’s not just about the place you might choose to live. It’s also about building wealth.

According to Realtor.com’s February Rental Report , the average mortgage payment for a starter home is $1,027 in the 50 biggest U.S. metro areas, more than a comparable rental payment in the same area. Of course, the cost of buying a home depends on many factors, including location, mortgage rate, and down payment. But it signals how much the homebuying math has changed over the past years.

Rent Respite

Renters across America may finally get a bit of a break after several years of surging rent prices.

According to Realtor.com’s data, in February the median rent for a 0-2 bedroom apartment year-over-year declined for the seventh consecutive month. Rent prices vary widely depending on location, with the national median currently sitting at $1,426 for a studio, $1,587 for a 1-bedroom, and $1,889 for a 2-bedroom apartment. A surge of new units has helped stabilize rent prices in many areas.

But not every renter will immediately feel relief. That’s the thing with rents, usually renters are locked in for a period, such as a year or two.

The Silver Lining for Homebuyers

Meanwhile, prospective homebuyers continue to face elevated borrowing costs and steep home prices, which is pushing up the monthly cost of homeownership. But there’s more to buying a home.

For example, it may be preferable in terms of investing for the future. Homeownership is a cornerstone of building generational wealth, one one of the major components of household wealth on the whole. While mortgage rates remain elevated in the wake of the Federal Reserve’s fight against inflation, the central bank expects rate cuts later this year. For prospective homebuyers, this could mean some relief is on the horizon.

Looking for more stories like this? Check out On the Money — SoFi’s one-stop-shop for news, trends, and tips!

Check it out

Please understand that this information provided is general in nature and shouldn’t be construed as a recommendation or solicitation of any products offered by SoFi’s affiliates and subsidiaries. In addition, this information is by no means meant to provide investment or financial advice, nor is it intended to serve as the basis for any investment decision or recommendation to buy or sell any asset. Keep in mind that investing involves risk, and past performance of an asset never guarantees future results or returns. It’s important for investors to consider their specific financial needs, goals, and risk profile before making an investment decision.

The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. These links are provided for informational purposes and should not be viewed as an endorsement. No brands or products mentioned are affiliated with SoFi, nor do they endorse or sponsor this content.

Communication of SoFi Wealth LLC an SEC Registered Investment Advisor

SoFi isn’t recommending and is not affiliated with the brands or companies displayed. Brands displayed neither endorse or sponsor this article. Third party trademarks and service marks referenced are property of their respective owners.
SOSS24040401