The typical U.S. asking rent was $1,948 per month
Renting Now Saves $1,066 a Month Compared With Buying
Renting remained less expensive than buying in every major U.S. metropolitan area in August, preserving a significant affordability advantage for rental housing despite rent growth.
The typical U.S. asking rent was $1,948 per month, compared with an estimated monthly payment of $3,014 for a newly purchased home, according to Zillow’s August Rent Report. That left renters paying $1,066 less per month or $12,792 less annually.
Zillow calculated the homeownership cost using a 30-year fixed-rate mortgage with 10% down at a 6.67% interest rate. The estimate also included property taxes and insurance but did not account for other ownership expenses such as closing costs and maintenance.
The gap has widened during the past six months as the typical monthly cost for homebuyers increased by $140, compared with a $32 increase in rent.
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Coastal Markets Differential
The difference was particularly pronounced in expensive coastal markets where home prices have risen much faster than rents.
The gap is most extreme for the 50 metros analyzed in San Jose, where renters paid $7,883 less per month than new homeowners. San Francisco followed at $5,413, while renters saved $4,441 per month in Los Angeles and $4,235 in San Diego.
Renting also offered a sizable advantage in several non-coastal markets. The monthly gap reached $2,640 in Salt Lake City, $2,504 in Denver, $2,054 in Austin and $1,634 in Phoenix.
Zillow said a household would need an annual income of $77,919 to afford the typical rental, assuming it spends no more than 30% of income on housing. Affording the typical new mortgage payment would require more than $120,500.
Overall asking rents increased 0.2% from July and 2.5% from a year earlier. Multifamily rents averaged $1,774, up 1.9% annually, while single-family rents reached $2,289 following a 3% increase.
Rent growth varied substantially by market. Multifamily rents rose 11.6% year-over-year in San Francisco and 7.7% in San Jose. They increased in 37 of the 50 largest metros.
Despite continued rent growth, concessions remained common. Zillow found that 39.2% of rental listings offered a concession in August. That share fell 0.6 percentage points from July but remained 2.5 percentage points above the year-earlier level.
The prevalence of concessions suggests apartment operators are still competing for tenants, particularly in markets that have absorbed significant new supply.
Source: GlobeSt.
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