Rents hit their highest point in two years recently. Now, according to a new report, rents have climbed so high that buying a starter home is more affordable than renting in many U.S. cities. That data comes from Realtor.com, which found that median rents are up 9.8% over the last year -- or $143 per month on average.
In 24 of the nation's largest markets, that jump was enough to push rents past the typical price for a starter home. According to the report, the monthly cost of a small starter home is $216 (or 15.5%) less than renting.
That's pretty good news for landlords, who just a few months ago were dealing with double-digit rent declines amid a pandemic. Fortunately, those days are now clearly in the rearview mirror.
Where have rents recovered the most? And where is buying a house much more affordable? Let's look at the market-level data to find out.
Where homes are more affordable than rents
According to Realtor.com, the median price for a two-bedroom starter home is $297,000, and the monthly cost of these homes has jumped 5.5% since 2020. Despite this bump, they're still not enough to rival rising rents, which rose nearly 10% in the same period.
"On average, rent growth has outpaced the monthly cost of buying a home. Despite fast-rising home prices, historically low mortgage rates have kept monthly costs in check," the report stated.
The discrepancy is most pronounced in Birmingham, Alabama, where a starter home costs just $728 per month. Rents? They're a whopping $1,089 -- about 33% more.
Other cities where buying is more affordable than renting include St. Louis (a 29.4% difference), Pittsburgh (27.7%), Cleveland (25.7%), Baltimore (20.5%), and Orlando (25.9%) and Tampa (22.9%), both in Florida. On average, the top 10 cities showed a 24% discrepancy between buying and renting.
Where renting wins out
In well-known tech hubs, renting still comes out as more affordable, according to the data. In Austin, Texas, for example, starter homes are virtually impossible to come by. Those listed sit at around $431,000 -- a 17.7% jump over last year's prices.
The typical starter home costs just under $2,800 per month -- and compared to renting, that's a jaw-dropping 79.2% more expensive.
Tech towns and high-cost housing markets -- like Seattle, Boston, New York, San Francisco, Los Angeles, and San Jose, California -- also favored renting over buying. In San Jose, the discrepancy was 47.5%, while in San Francisco, it was 44.4%.
The Millionacres bottom line
Clearly, rent prices are back from the dead. Throw in the Supreme Court's recent strikedown of the Centers for Disease Control and Prevention's eviction ban, and the good news just keeps rolling for landlords.