In recent home rental news, the buying vs renting a home debate has been settled. According to a Bankrate study, it hurts your wallet less to rent a home, not buy one, in most US cities today. Yes, even in the biggest city right here in Northern Virginia. Learn why the current market makes renting more economical than throwing your mortgage money out into the dark.
Main Takeaways
- On average, it costs nearly 37% less to rent than to buy in the biggest US cities.
- In Arlington, VA, it’s 50.4% cheaper to rent than to buy a home.
- Renting has various benefits over buying, such as free maintenance work, no property taxes, and fewer upfront fees.
The Data Behind the Findings
As property managers in North Virginia, we weren’t surprised to learn the advantages of renting. On average, Bankrate found it costs almost 37% more to buy than rent per month in America. It analyzed February 2024 Redfin and Zillow housing data to confirm this statement applies to all 50 biggest US cities.
More specifically, monthly median-priced home mortgage payments add up to $2,703, on average. On the other hand, rent generally costs $1,979 per month in the US.
What’s more, in 21 of these cities, people spend an average of over 50% more a month buying vs. renting a home.
Rent rates are going down across the board. Meanwhile, the housing market is in an upward spending spiral. For 30-year mortgages, the national interest rates have risen 3% from March 2022 to April 2024. Furthermore, the current mortgage rates have doubled from what they were in 2019. As of April 17, 2024, these rates sat at 7.33%.
This trend partially stems from the vast chasm between housing supply and demand. There are far more people looking to own homes than there are ones available for sale.
The Most Expensive Virginia City
Arlington, VA, is one top area where buying vs. renting a home is a no-brainer, according to Bankrate. There, the typical monthly rent is $2,295, while the typical mortgage payment is $3,451. The buy-to-rent cost ratio is a whopping 50.4%.
They noted that Arlington, VA, has a competitive housing market with especially high home prices. This makes it especially crucial to rent, rather than buy, in this city and nearby areas.
Advantages of Renting
As Bankrate noted, renting can open the path to other forms of wealth and savings. These are some big factors to consider when seeing if it’s cheaper to rent or buy.
Access Other Types of Investing
Bankrate observed that renting gives home dwellers more flexibility with less upfront expenses. After all, if you don’t have to deal with a down payment or closing fees, you can maintain more cash. Then, you can funnel that extra cash into the stock market. That is one of the biggest, if not the biggest, advantages of renting.
On the other hand, if you’re buying a home, you must invest most of your money in a down payment. So, you don’t have room to spare for other assets. And that’s just the tip of the iceberg.
Additional Advantages of Renting:
Less Upfront Fees: When you rent a home, you are solely responsible for the rent fee, utilities, and other basic fees.
No Repair and Maintenance Costs: Your landlord must pay the tab for repair and maintenance costs because they ultimately own the property.
No Property Taxes: Again, since your home is in your landlord’s name, you’re not the one who must pay their taxes.
No Homeowner’s Association Costs: Because your property is under your landlord’s purview, there’s no homeowner’s association to follow.
Rental Insurance: Rental insurance, on average, costs less than homeowner’s insurance.
Freedom and Flexibility: When you rent your place, you are free to move wherever you choose. After all, you’re not tied down to your home. If you’re a student who needs new off-campus housing, for instance, you can more easily migrate. Even better, you can have more choices for your ideal home than you might in a tight housing market.
Home Ownership Risks
Aside from the guaranteed upfront costs, home ownership can come with other potential perils. Here are other points to assess when deciding on buying vs. renting a home.
Property Devaluation: First off, your property value can fall, which can smash to smithereens the time and money you invested in your property.
Home Equity: Furthermore, home equity can take years and years to accumulate. This slows your ROI.
Competitive Market: In the current state of our housing market, you may face cutthroat competition for the same small cluster of homes. Also, as people snatch up the most desirable homes, there could be slim pickings left.
Routine Fees: Homeowners are responsible for annual property taxes and homeowner’s insurance. These costs can be exorbitant.
Homeowner’s Association Fees: If your prized property is under the tabs of a homeowner’s association, you must cough up all the fees they expect from you.
Repair and Maintenance Costs: When you own a home, you’ll inevitably run into mishaps. For example, you may suddenly find you must replace your roof or fix your burst pipes. If you own a home, you must pay up those costs.
Time-Inefficiency: Also, you must pay in the form of time lost maintaining a home. The routine landscape maintenance, leaf removal, and other matters all detract from the time you could have spent elsewhere.
Buying vs. Renting a Home: Expert Endorsements
For some, just one or two sources might not hold much weight. So, it might be helpful to know that nationally renowned housing experts have concurred with the above statements.
In Bankrate’s analysis, they consulted industry leaders who further backed up the statistics: in many cases, it’s cheaper to rent than buy.
Redfin’s chief economist, Daryl Fairweather, agreed that people should rent, not buy. They noted that those strapped for cash will struggle to pay their mortgage until they can attain refinancing. Because of this, aspiring homeowners could find themselves deep into debt. Instead, Fairweather found it would be a better idea to take advantage of stable rent rates. Later, once you’ve saved more money towards a down payment, you can start thinking about home ownership.
Additionally, Danielle Hale, Realtor.com’s chief economist, cautioned people to plan carefully. She noted that people should only strive towards home ownership if they plan on staying in their places for years and years.
Find Your Next Rental Home
If you’re asking whether it’s cheaper to rent or buy, the answer is clear. The advantages of renting a home are tenfold compared to buying in the current market. Those seeking new housing should remember this when deciding on buying vs. renting a home.
As trusted property managers in North Virginia can help you find and secure your new rental home. Our sole job is to streamline the rental process for you from start to finish. First off, we’ll jumpstart your success with a dedicated, all-inclusive home listing portal. Then, when you move in, we’ll handle the maintenance costs and coordination, renovations, move-in process, and so much more. Contact us today to simplify your housing search.
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