Realtor.com® December Rental Report: Renting Costs Nearly $800 Less Per Month than Buying

Rhea-AI Summary

The latest Realtor.com® Monthly Rental Report reveals that renting is significantly cheaper than buying a starter home in many U.S. metros as of December 2022. Renters saved an average of 41.4% ($792) compared to first-time homebuyers, with Austin, Texas (121.3% savings) leading the way. Nationwide, the median rent was $1,712, while typical monthly starter home payments rose 37.4% year-over-year to $2,504. Despite lower rent growth (+3.2%), rental affordability remains a pressing issue. The report indicates that, among 50 major markets, renting was more affordable in 45, a considerable increase from 30 last year, driven by high mortgage rates.

Positive

• None.

Negative

• High mortgage rates have significantly increased starter homeownership costs (up 37.4% YoY).
• Rental affordability issues continue to persist despite lower rent growth.

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:

1. Austin, Texas (121.3% or $2,013)
2. San Francisco, Calif. (97.0% or $2,855)
3. Seattle, Wash. (86.1% or $1,772)
4. San Jose, Calif. (83.0% or $2,621)
5. San Diego, Calif. (77.2% or $2,085)
6. Los Angeles, Calif. (74.9% or $2,150)
7. Boston, Mass. (73.1% or $2,097)
8. Portland, Ore. (71.2% or $1,246)
9. Phoenix, Ariz. (70.1% or $1,116)
10. 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 Median Rent	Dec. 2022 Median Rent, YY Change	Full-Year 2022 Avg. YY Rent Change
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- Year 2022 Avg.
		Buy-Rent Difference (%)	Buy-Rent Difference ($)	Overall Median Rent (0-2 beds)	Overall Rent YY	Monthly Starter Home Cost	Monthly Starter Home Cost YY	Overall Rent YY
1	Austin-Round Rock, Texas	121.3 %	$2,013	$1,659	-0.7 %	$3,672	31.1 %	9.2 %
2	San Francisco-Oakland-Hayward, Calif.	97.0 %	$2,855	$2,943	3.4 %	$5,798	34.7 %	9.3 %
3	Seattle-Tacoma-Bellevue, Wash.	86.1 %	$1,772	$2,059	1.2 %	$3,831	57.3 %	11.0 %
4	San Jose-Sunnyvale-Santa Clara, Calif.	83.0 %	$2,621	$3,156	5.9 %	$5,777	39.6 %	13.7 %
5	San Diego-Carlsbad, Calif.	77.2 %	$2,085	$2,702	1.2 %	$4,787	51.3 %	15.7 %
6	Los Angeles-Long Beach-Anaheim, Calif.	74.9 %	$2,150	$2,870	2.3 %	$5,020	37.7 %	13.0 %
7	Boston-Cambridge-Newton, Mass.-N.H.	73.1 %	$2,097	$2,868	6.4 %	$4,965	32.8 %	19.8 %
8	Portland-Vancouver-Hillsboro, Ore.-Wash.	71.2 %	$1,246	$1,750	4.7 %	$2,996	34.8 %	9.1 %
9	Phoenix-Mesa-Scottsdale, Ariz.	70.1 %	$1,116	$1,592	-3.3 %	$2,708	36.6 %	10.4 %
10	Sacramento–Roseville–Arden-Arcade, Calif.	67.7 %	$1,241	$1,834	-4.2 %	$3,075	32.9 %	5.2 %
11	Rochester, N.Y.	66.4 %	$887	$1,335	4.5 %	$2,222	41.7 %	8.7 %
12	Milwaukee-Waukesha-West Allis, Wisc.	66.1 %	$1,024	$1,549	6.7 %	$2,573	71.5 %	8.6 %
13	Denver-Aurora-Lakewood, Colo.	63.5 %	$1,207	$1,902	0.8 %	$3,109	27.2 %	9.0 %
14	Houston-The Woodlands-Sugar Land, Texas	62.4 %	$853	$1,368	1.7 %	$2,221	31.7 %	8.7 %
15	Dallas-Fort Worth-Arlington, Texas	57.2 %	$895	$1,564	3.4 %	$2,459	27.1 %	14.1 %
16	Nashville-Davidson–Murfreesboro–Franklin, Tenn.	57.0 %	$913	$1,602	2.5 %	$2,515	32.0 %	14.3 %
17	New York-Newark-Jersey City, N.Y.-N.J.-Penn.	57.0 %	$1,537	$2,698	12.2 %	$4,235	10.2 %	15.4 %
18	Columbus, Ohio	55.3 %	$684	$1,237	5.4 %	$1,921	34.4 %	9.4 %
19	Las Vegas-Henderson-Paradise, Nev.	54.6 %	$817	$1,495	-4.5 %	$2,312	34.0 %	11.9 %
20	San Antonio-New Braunfels, Texas	53.4 %	$691	$1,294	3.6 %	$1,985	41.1 %	13.7 %
21	New Orleans-Metairie, La.	52.2 %	$739	$1,417	-0.7 %	$2,156	11.7 %	7.7 %
22	Minneapolis-St. Paul-Bloomington, Minn.-Wisc.	50.8 %	$776	$1,527	2.5 %	$2,303	37.9 %	3.8 %
23	Washington-Arlington-Alexandria, DC-Va.-Md.-W. Va.	50.7 %	$1,066	$2,103	3.7 %	$3,169	35.0 %	9.3 %
24	Riverside-San Bernardino-Ontario, Calif.	45.5 %	$927	$2,037	-6.0 %	$2,964	50.7 %	6.0 %
25	Jacksonville, Fla.	44.4 %	$657	$1,479	1.6 %	$2,136	60.8 %	13.3 %
26	Raleigh, N.C.	42.0 %	$646	$1,537	2.3 %	$2,183	29.6 %	14.0 %
27	Cincinnati, Ohio-Ky.-Ind.	37.4 %	$473	$1,265	7.0 %	$1,738	42.2 %	8.5 %
28	Providence-Warwick, R.I.-Mass.	37.3 %	$771	$2,067	6.7 %	$2,838	39.2 %	17.3 %
29	Buffalo-Cheektowaga-Niagara Falls, N.Y.	37.2 %	$442	$1,188	2.3 %	$1,630	25.5 %	6.7 %
30	Richmond, Va.	35.6 %	$487	$1,368	6.2 %	$1,855	38.3 %	12.1 %
31	Atlanta-Sandy Springs-Roswell, Ga.	34.0 %	$567	$1,669	-1.7 %	$2,236	35.6 %	14.9 %
32	Tampa-St. Petersburg-Clearwater, Fla.	32.2 %	$567	$1,760	-4.3 %	$2,327	50.7 %	14.4 %
33	Miami-Fort Lauderdale-West Palm Beach, Fla.	31.5 %	$846	$2,682	4.7 %	$3,528	40.3 %	29.9 %
34	Philadelphia-Camden-Wilmington, Penn.-N.J.-Del.-M.D.	27.4 %	$465	$1,697	0.4 %	$2,162	36.5 %	6.8 %
35	Oklahoma City, Okla.	25.8 %	$245	$950	9.6 %	$1,195	25.8 %	11.2 %
36	Hartford-West Hartford-East Hartford, Conn.	24.3 %	$421	$1,730	7.5 %	$2,151	37.8 %	10.2 %
37	Louisville/Jefferson County, Ky.-Ind.	22.8 %	$250	$1,097	4.3 %	$1,347	46.9 %	10.4 %
38	Charlotte-Concord-Gastonia, N.C.-S.C.	21.5 %	$343	$1,592	2.3 %	$1,935	45.9 %	12.9 %
39	Chicago-Naperville-Elgin, Ill.-Ind.-Wisc.	18.2 %	$359	$1,968	17.5 %	$2,327	33.7 %	16.5 %
40	Virginia Beach-Norfolk-Newport News, Va.-N.C.	15.2 %	$218	$1,432	2.4 %	$1,650	49.6 %	9.0 %
41	Detroit-Warren-Dearborn, Mich.	13.5 %	$166	$1,227	5.8 %	$1,393	30.4 %	6.7 %
42	Cleveland-Elyria, Ohio	13.1 %	$151	$1,152	5.0 %	$1,303	32.8 %	8.2 %
43	Orlando-Kissimmee-Sanford, Fla.	11.7 %	$212	$1,812	4.0 %	$2,024	53.8 %	20.5 %
44	Kansas City, Mo.-Kan.	10.9 %	$140	$1,288	8.0 %	$1,428	39.2 %	10.5 %
45	Indianapolis-Carmel-Anderson, Ind.	9.9 %	$125	$1,269	9.4 %	$1,394	44.0 %	10.2 %
46	Baltimore-Columbia-Towson, Md.	-3.7 %	-$65	$1,749	2.6 %	$1,684	25.4 %	8.4 %
47	St. Louis, Mo.-Ill.	-6.9 %	-$83	$1,211	2.7 %	$1,128	34.1 %	7.1 %
48	Birmingham-Hoover, Ala.	-23.5 %	-$270	$1,149	3.6 %	$879	19.1 %	7.8 %
49	Pittsburgh, Penn.	-24.1 %	-$348	$1,445	4.5 %	$1,097	21.2 %	7.2 %
50	Memphis, Tenn.-Miss.-Ark.	-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^®.

Media Contact
press@realtor.com 

¹ See methodology for rent vs. buy calculation details.

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SOURCE Realtor.com

FAQ

What are the savings for renters in major U.S. markets as reported in December 2022?

Austin, Texas led with a 121.3% savings, followed by San Francisco (97.0%) and Seattle (86.1%).

How does average rent compare to starter home payments in December 2022?

On average, renters faced costs 41.4% lower than starter homeowners, with a median rent of $1,712 compared to monthly starter home payments of $2,504.

What factors are driving rental affordability issues in 2023?

Rental affordability is impacted by low vacancy rates, lagging new construction, and high demand from potential first-time buyers.

How many markets preferred renting over buying in December 2022?

Renting was more affordable than buying in 45 out of the 50 largest U.S. markets, compared to 30 markets the previous year.

What are the trends in rental costs reported for December 2022?

Typical asking rents rose an average of 11.6% year-over-year, despite a slowdown in rent growth.