AUSTIN, Texas — A new housing report says that in Austin, virtually no homes are cheaper to buy than to rent.
According to Redfin, as our city's population has exploded, rising home prices and mortgage rates have made it more expensive to buy than rent.
The study shows the average home in the U.S. is 25% more expensive to buy than to rent. According to the study, topping the list is the Bay Area, where buying a home is more than twice as costly as renting.
In Austin, the average rent is 5% cheaper than a monthly mortgage payment.
The only major Texas city where buying is cheaper than renting is Houston. On average, mortgage payments there are 1% less than rent rates.
“Buying a home often makes more financial sense than renting if you can afford a down payment and monthly mortgage because you’re building equity. When you own your home, your home pays you; when you rent, you and your home pay your landlord,” Redfin Deputy Chief Economist Taylor Marr said. “But buying isn’t a feasible option for everyone. Some people move around a lot, so renting might make more sense because they won’t be in their home long enough to build equity. Many others simply don’t have the money for a down payment – a situation that has become increasingly common due to rising mortgage rates and elevated home prices.”
The Redfin study said in Detroit, Philadelphia, Cleveland and Houston, it’s cheaper to buy a house than rent one because home values in those areas have stagnated relative to the country as a whole.
Boomtown is KVUE's series covering the explosive growth in Central Texas. For more Boomtown stories, head to KVUE.com/Boomtown.