Buying A Home Is $1K More Expensive Than Renting

Buying a starter home is over $1,000 more expensive per month than renting but that doesn’t mean either is a cheap option.

A new starter home now costs $1,091 more on the month than renting the same property, a new analysis from John Burns Research & Consulting found.

Though this is better than October 2023’s peak of $1,349, it’s still far higher than the historic national average of $233.

Rates would need to drop to 3.75% to bridge the gap.

The market is incredibly regional right now, so that number won’t be true everywhere. Across the top 20 single-family rental markets, the spread between purchasing and renting a starter home ranges from $4 in Cincinnati to $1,900 in Austin.

Americans are desperate for cooler rents. The number of rent-burdened households hit another record high last year. The share of fully employed renters who are spending more than 30% of their income on rent is 36% — up from barely 25% in 2001.

“Ultimately, the future of rental affordability will depend on our ability to increase supply in constrained markets and increase subsidies that offset high rents for lower-income households,” researchers at Harvard’s Joint Center for Housing Studies recently commented.

“Affordability will also depend on the quality of employment opportunities that are available, prevailing wage trends, and the existence of policies that increase household incomes through the tax code or through guaranteed income programs.”

The White House is further blaming price fixing for the unaffordable landscape. An analysis from the White House Council of Economic Advisers found that renters in the U.S. spent an extra $3.8 billion last year because of pricing algorithms used by landlords.

The Justice Department filed an antitrust suit against RealPage, a software company accused of fixing prices for landlords, in August.