R
ental prices have fallen for the 15th consecutive month, making it seem like a no-brainer to rent instead of buy. However, the decision is not that straightforward.
According to Realtor.com's October 2024 Rental Report, the median asking rent in major metro areas was $1,720, down from last month and its August 2022 peak. Meanwhile, with a median home listing price of $425,950, a monthly mortgage payment would set the average homebuyer back around $2,229 – about 30% more than the median rental price.
Renting has several benefits beyond short-term savings. It doesn't require homeownership responsibilities like maintenance and upkeep, which can be costly and time-consuming. Additionally, renters are not responsible for major system issues or appliance repairs, as the landlord typically handles these problems.
Renters also enjoy flexibility, with the ability to move at the end of their lease or sublease their space if needed. However, renting doesn't allow homeownership equity growth, and living situations can be subject to a landlord's whims.
Buying offers long-term wealth-building opportunities through equity growth and stability with fixed-rate mortgages. While current interest rates are higher than in recent years, they may not be as daunting when considering the benefits of homeownership. A fixed-rate mortgage provides predictability, whereas renters often face annual rent increases at the mercy of their landlords.
However, buying comes with its own set of challenges, including a significant down payment requirement and maintenance responsibilities. Potential buyers should weigh short-term savings against long-term opportunities to build equity.
To determine whether renting or buying is more financially advantageous, Realtor.com's Rent vs. Buy Calculator can provide personalized insights based on current market conditions. This tool helps users understand how long it might take for purchasing a home to become the more financially beneficial option.
In some cities, like Pittsburgh and Oklahoma City, median listing prices are relatively low, but rental prices are still high. In contrast, cities like San Jose and Los Angeles have extremely expensive rental markets, with buying costs significantly higher than renting.
