If you've been feeling defeated about not being able to buy a home quite yet in today's market, don't worry: It's cheaper to rent than buy in every one of the country's 50 largest metropolitan areas, according to a recent report from Bankrate.
While rent prices are still at an all-time high, rent increases have began to soften across the country over the past year. This can be seen through RentCafe's March 2024 ranking of most competitive rental markets in the nation, where North Jersey ranked third despite being the country's most competitive market overall just a year prior.
This, combined with rising home prices, elevated mortgage rates and low housing inventory, has resulted in renting becoming the most affordable housing option for many today. In fact, Bankrate found that renting is 37% cheaper than buying a typical home in all 50 of the largest metropolitan areas.
"Historically, the narrative has been — when housing has been more affordable and more accessible, and there were lower mortgage rates and lower home prices — that monthly mortgage payments can actually be less than rent," said Alex Gailey, an analyst with Bankrate. "But, what was surprising was finding that across all 50 of the largest metros, it's still cheaper to rent than it is to own, and that simply comes down to the current market conditions right now."
In the New York metropolitan area, it is approximately 49.7% more expensive to buy a property than it is to rent, according to the report. While a typical monthly mortgage payment here is about $4,775, typical monthly rent is just $3,189.
Gailey said that especially in coastal metropolitan areas that like New York, there is a lot more demand than there is supply which drives up already high housing costs. So, while rent is generally higher in these metropolitan areas than others, home prices are also significantly higher, she said.
"It really does depend on where you live. It depends on how much income you have and if you can even afford to buy a home in your area," she said. "Especially if you are living in a high cost coastal metro area, it is a lot more challenging to buy, even when the market isn't how it is right now."
The goal of owning a home still exists among many. Bankrate also conducted a survey that found that 78% of respondents say that owning a home is still part of the American Dream. But, lack of income (56%), high home prices (47%) and not being able to afford a down payment and closing costs (42%) are the biggest driving factors for people continuing to rent, according to the survey.
In addition to current market conditions, there are several other factors that contribute to the high cost of owning a home that you don't have to deal with when renting, including down payments and closing costs, homeowners insurance, property taxes, maintenance and repairs.
"You can have fixed monthly mortgage payments, which can be a shield against inflation or increasing rents in your area, but at the same time, there are a lot of costs that come with owning a home that you may not think of off the top of your head, such as homeowners insurance, property taxes, even maintenance and repairs," Gailey said.
"I think it creates a difficult situation for Americans. They're stuck between a rock and a hard place when it comes to housing because, ultimately, in the current state we're in, renting and owning are both expensive."
Maddie McGay is the real estate reporter forNorthJersey.comand The Record, covering all things worth celebrating about living in North Jersey. Find her onInstagram @maddiemcgay,onX @maddiemcgayy, and sign up for herNorth Jersey Livingnewsletter.Do you have a tip, trend or terrific house she should know about? Email her at[email protected].
