Buying A Home In The US May Soon Become Just As Cheap As Renting One, According to Experts
05 Feb 2020
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- The decline in mortgage rates has positively impacted homebuying in the US, driving down mortgage prices and making them more affordable.
- Current average rental and mortgage amounts on a monthly basis stand at a difference of under $300.
- In many counties, home renters may want to reevaluate whether buying a home is a cheaper option for them than renting one.
A new study has revealed that the cost of renting a home in the US is now only slightly lower than buying one. According to reported figures by Realtor.com
, the amount of monthly median rent in the country stood at $1,319, while the median amount for a monthly mortgage payment was $1,600 towards the conclusion of 2019. Compared with data reported in 2018, this is an increase of 4% in rent while monthly mortgage payments have declined by 1%. The study was conducted in a total of 593 counties across the US that had a population of greater than 100,000. According to economists, the mortgage buying situation has become very favorable for homebuyers in the US, bridging the gap that has long existed between the costs of buying and renting accommodation in the US. Details reported within the data have revealed that monthly rent declined for around 84% counties where the price of a home stood at a value of 260% greater than the national median while rental values were only 79% higher than the national median. This gap is reducing at a faster pace in counties that are considered to have a friendly atmosphere for renters. However, counties like Brooklyn, NYC, and also Santa Cruz, saw a decline in rental amounts of 24%, 20%, and 18%, respectively, which is well above the national decline of 2.8% in national rent amounts. These counties are also hotspots for both national and international real estate investors and, hence, home prices tend to remain high. In 16% of counties that were analyzed in the study, the average amount being paid in the monthly mortgage was lower than the monthly rental amount. Such a scenario was experienced in only 12% of the counties a year earlier. These counties include Baltimore City and Clayton, for example, where the cost of an average home was 53% cheaper compared to the national median home price of around $300,000. In these areas, rents only declined by just 11% since 2018. These areas, including Cumberland in New Jersey, and Richmond in Georgia, are also packed with homes available for sale and not many options for rental accommodations, which is in stark contrast to the rest of the country where options are limited for homebuyers due to limited building investments, according to experts. As many as 25 more counties also joined the list of buyer-friendly localities in the US in the year 2019.