Renting a median-priced unit is still more affordable for median wage earners than buying the median-priced for-sale listing in all major U.S. metros, except for Detroit and Pittsburgh, according to the Realtor.com January Rent Report. In January 2024, there were six markets where buying was less expensive than renting compared with this year's two.
The four less markets are a result of retreating rental prices and the persistence of high mortgage rates, Realtor.com points out. Over the past year, the market as a whole has moved in a more renter-friendly direction.
"For most Americans, owning a home is still a big part of the American dream, yet the lower monthly costs of renting in all but two of the 50 largest markets are a key consideration," says Danielle Hale, chief economist for Realtor.com. "This relative cost advantage is one of the reasons we expect an increase in renter households and declines in the homeownership rate in 2025."
Although rents are falling, renters are still feeling the pinch from the rapid rent growth of 2021 and 2022. While last month's rent amount is lower than both January 2024 and January 2023, it still surpasses January 2020 by $257 (16.1%).
In January, Pittsburgh and Detroit had the lowest median listing prices of the top 50 metros, with Pittsburgh at $229,700 and Detroit at $239,950. The two Rust Belt metros are often among the most affordable for buying a home. With the share of income used on rent increasing year over year in Detroit and remaining nearly flat in Pittsburgh, buying a home has become more economical than renting one.
According to January’s report, New York; San Jose, California; and Detroit are the only metros where the share of income used on both rent and buying a home are growing. In these metros, it takes more income to both rent the median-priced rental unit and buy a median-priced home, becoming less renter- and buyer-favoring.
Additionally, the Kansas City metro is becoming more buyer-favoring. In Kansas City, a higher share of income is spent on rents and a lower share of income on buying. There are 18 metros that have become rent-favoring, where more of the median earner's income is needed to buy a home, than a year ago.
