Renting now costs less than buying a starter home in metro Denver

Buying an entry-level home in metro Denver used to be cheaper than renting a similar property or apartment. But steep home price gains before and during the pandemic have flipped the advantage in favor of renting, according to a monthly rental report from Realtor.com. In July, the cost for a new buyer in owning a starter home in the Denver area was $2,143[cq comment=”cq” ] a month, a 14.8%[cq comment=”cq” ] premium over the median monthly rent of $1,866,[cq comment=”cq” ] according to calculations from Realtor.com. “Solid gains in the prices of homes for sale during the first half of this year have pushed the (Denver) market in favor of renting,” said George Ratiu,[cq comment=”cq” ] manager of economic research at Realtor.com. The S&P CoreLogic Case-Shiller National Home Price Index for June, released Tuesday, measured an 18.6%[cq comment=”cq” ] annual gain in U.S. home prices, a new record. The index for metro Denver clocked a 19.6%[cq comment=”cq” ] gain, also a record. Phoenix, San Diego and Seattle lead all metros for annual home price increases at 29.3%, 27.1%, and 25.0% respectively. “June 2021 is the third consecutive month in which the growth rate of housing prices set a record,” said Craig Lazzara,[cq comment=”cq” ] global head of index investment strategy at S&P DJI in the monthly update. “The last several months have been extraordinary not only in the level of price gains but in the consistency of gains across the country.” Those record-setting home price gains are helping shift the balance in favor of renting in some cities like Denver. Of the 50 large metro areas that the Realtor.com study looked at, it was cheaper to rent in 26 metros and cheaper to buy in 24. The markets where buyers enjoy the largest cost savings over renters in July were Birmingham, Ala., with a 33.1% discount; St. Louis, with a 29.4% savings; Pittsburgh, with a 27.7% savings; Orlando, Fla., with a 25.9% savings, and Cleveland, with a 25.7% savings.[cq comment=”cq” ] [related_articles location=”right” show_article_date=”false” article_type=”curated” curated_ids=”4729533,3188317,4516078″] It’s a different story in popular tech hubs, where a lack of housing supply and in-migration have driven up home values. Austin, Texas, has the biggest gap in favor of renting, with a savings of 79.2%[cq comment=”cq” ] or $1,228[cq comment=”cq” ] a month in favor of renting. Other more renter-friendly markets include San Jose, Calif., where purchasing costs are 47.5% higher than renting; San Francisco, at 44.4% higher; Seattle, at 44.2% higher; Boston, at 40.9% higher; Los Angeles at 39.4% higher; and New York, 32.0% higher. Compared to those metros, Denver’s gap remains small enough that a buyer may want to lock in a fixed mortgage payment and avoid future rent hikes. Ratiu said the increasing supply of for-sale homes hitting the market could help temper price gains going forward. “While the buy-vs.-rent ratio may not swing in favor of buying in the next 12 months, Denver is not expected to see the significant market imbalance present in markets like Austin and Seattle,” he predicted.

Renting now costs less than buying a starter home in metro Denver

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