10 housing markets where it’s cheaper to buy than rent in 2022

Climbing rents are making the ultra-competitive housing market more palatable.

Rents escalated for the eighth straight month in January and are up 19.8% from the same time last year, according to a recent Realtor.com report. The rise is most pronounced in tech hubs like Austin, where rents shot up 31% in the past year, but they also remain elevated in major regions like New York City, Los Angeles and the Bay Area.

The nation’s housing market continue to see record pricing, a shortage of supply and rising mortgage rates. Rent growth, however, has created a situation where buying a home is more affordable than renting in 26 of the nation’s 50 largest metros, according to Realtor.com.

Prices have been driven up in part by investors, who bought a greater share of single-family homes on the market in a bid to capture the sky-high rents, said Ben Chenault, a certified mortgage planner and area manager for Mortgage Banc, a branch of Fairway Independent Mortgage Corp. in Birmingham, Alabama. Chenault’s hometown has the best buying-to-renting value and the lowest buying cost among the top-10 metros, per the Realtor.com analysis.

“When you think about the cost of homeownership, it’s much smarter to go ahead and buy now,” Chenault, a 25-year veteran of the mortgage industry, said.

The Realtor.com analysis used its own rental data for studios, one-and two-bedroom units in the nation’s 50 largest metros, and calculated monthly buying cost by averaging median listing prices while assuming a 7% down payment, a mortgage rate of 3.45% and taxes, insurance and HOA fees. Of the 26 markets where buying is cheaper than renting, the monthly cost of a starter home was on average $323 lower than the typical rental payment in January.