Starter Homes Still Cheaper Than Renting in Many Areas Share

Dated: September 1 2021

Views: 25

Three small adjacent homes

© peterspiro - iStock / Getty Images Plus 

August 27, 2021

Aspiring first-time home buyers may not want to give up on that competitive house hunt: In many markets, they could save money by owning.

Buying a starter home is more affordable than renting in nearly half of the largest U.S. metros, according to a new study released by®.

The U.S. median rental price has climbed nearly 10% year over year to $1,607. That is 15.5% higher than the monthly payments for a starter home, the lower-priced tier of homes for sale in a market. Low mortgage rates are helping to offset recent jumps in home prices.

“Rents hit new highs in 40 of the 50 largest U.S. metros this July and grew at an almost double-digit pace—the fastest yearly rate we’ve seen in the last 18 months,” said Danielle Hale,®’s chief economist. “Sky-high rents and historically low interest rates have made the monthly cost to buy a starter home lower than renting one in nearly half the markets across the U.S.”

Still, first-time buyers will want to weigh the full costs of homeownership. “But if the monthly costs have been holding you back, data suggests it’s worth exploring in many markets,” Hale said. “Although it’s still hard to find entry-level homes, we are seeing more smaller homes coming on the market.”

Many of July’s highest rent gains were in secondary markets where rental demand has quickly climbed during the pandemic. Remote work has allowed workers to leave big cities and work from anywhere. That has also helped keep a lid on monthly starter home costs in some of the largest metros. The costs of starter homes, on average, were 15.5%—or $216—lower than rents in nearly half of the 50 largest U.S. metros, the® study said.

In the top 10 metros that favored first-time homebuying over renting in July, monthly starter home payments were, on average, 24.3% lower than rents.

First published by Realtor Magazine

data on prices of starter homes

Blog author image

Guillermo Lugo-Beltre

A professional Realtor with several years of Real-estate experience, serving his community in buying and selling real-estate using his expertise and commitment, as a retired military member takes grea....

Latest Blog Posts

Boerne, Texas Need to Know Homes for Sale

Boerne, Texas is at the beginning of the Texas Hill Country as you leave San Antonio.  Living this close to San Antonio and being able to appreciate the beauty and wonders of the Texas

Read More

Benefits to a Pre-Listing Inspection

A pre-listing inspection is one thing a seller can do prior to putting their home on the market. A pre-listing inspection can make the seller aware of any defects and repairs that need to get done

Read More

Why It’s Still Safe To Sell Your Home

KCM Crew    September 13, 2021If you’re on the fence about whether or not you want to sell your house this year, there’s good news. Real estate professionals are

Read More

Home Price Appreciation Is Skyrocketing in 2021; What about 2022?

By:  KCM - Keeping Current Matters 9/2021One of the major story lines over the last year is how well the residential real estate market performed. One key metric in the spotlight is home price

Read More