Rents in urban areas have dropped as a result of the pandemic, but even so, buying makes the most sense in these 10 metros, says Realtor.com. Thanks to record low interest rates, the monthly cost of purchasing a home has changed little despite ever-increasing home prices. To identify the metros where it’s most logical to buy versus rent, the Realtor.com analyzed the monthly cost of buying a home with a 30-year fixed-rate mortgage at each city’s median listing price, including taxes and insurance. Across all 50 metros, the monthly cost to purchase a median home in January was $1,988 while the median monthly rent was $1,727.
But notoriously expensive California and other West Coast metros lead the list of the highest-priced cities where, financially, it makes more sense to rent because the monthly cost of a mortgage far exceeds the median rent. These places also tend to have incomparable natural beauty and outdoor access and are popular vacation destinations. Two had median list prices over $1 million.
These more expensive markets tend to have a higher share of well-paying (often tech) jobs occupied by a high concentration of young professionals who have plenty of cash to spend.
“Wherever there are high-paying jobs and employers supporting them, you’re beginning to see higher-end rental complexes that can start at $3,500,” says Ramesh Rao, a Coldwell Banker Global Luxury agent based in Silicon Valley. “When these people start looking at buying a median price home, their total cost toward any kind of roof over their head goes up two times.”