Housing: Why renting makes more sense than buying
Realtor.com Chief Economist, Danielle Hale, breaks down why rent growth has moved back to a more normal pace, and weighs in on renting vs. buying.
You can watch the full interview here.
00:13: On rent growth
00:26: Tradeoff of renting vs. buying
00:38: The 'better decision' in renting vs. buying
DANIELLE HALE: For renters in the market, in fact, today we've got new rental data for December 2022. What we see is that rent growth is down to 3.2%, which is the level that we saw right prior to the pandemic. So after declining and then skyrocketing, rent growth has moved back to a more normal walk pace for renters.
That said, rents themselves are still significantly higher than they were before the pandemic. And for first time homebuyers in particular that you talked about, making that tradeoff of do I continue to rent or do I decide to buy, in 45 of the 50 markets that we studied, it is a much better decision to continue to rent if you're just looking at those monthly financial costs. You're gonna see a much lower cost to rent, as opposed to buying.
And the differential is actually biggest in some of those tech markets. So the Austins and San Franciscos of the world where, you know, home-- despite the fact that home prices may be slowing or in some cases declining, the rent via tradeoff is still tipped very heavily in favor of renting.