10 Major Metros Where Rent Is More Affordable — Is Buying Still Worth It?

According to a recent Realtor.com report, the median asking rent price for the 50 largest metropolitan areas was down 0.2% annually in January, making the cost of living that bit easier to afford. The research found that even though the median rent increased from $1,695 in December to $1,703 in January, it was the 18th consecutive month where rents fell on an annual basis.

The positive for renters is that there are numerous major metro areas where the rent is more affordable now.

These are the top metros where rent is more affordable than last year. The list is organized by percentage price drop year over year. The rent prices are for any unit, from a studio to a two-bedroom condo.

Denver-Aurora-Centennial, Colorado

• Year-over-year rental price change: -5.6%
• Median monthly rent: $1,796
• Income spent on rent: 20.2%
• Income spent on buying: 33.4%

Austin-Round Rock-San Marcos, Texas

• Year-over-year rental price change: -4.8%
• Median monthly rent: $1,467
• Income spent on rent: 17.2%
• Income spent on buying: 30.3%

San Diego-Chula Vista-Carlsbad, California

• Year-over-year rental price change: -4.8%
• Median monthly rent: $2,695
• Income spent on rent: 31.4%
• Income spent on buying: 57.7%

Memphis, Tennessee-Mississippi-Arkansas

• Year-over-year rental price change: -4.3%
• Median monthly rent: $1,177
• Income spent on rent: 21.1%
• Income spent on buying: 30.8%

Riverside-San Bernardino-Ontario, California

• Year-over-year rental price change: -4.1%
• Median monthly rent: $2,065
• Income spent on rent: 28.8%
• Income spent on buying: 43.6%

Chicago-Naperville-Elgin, Illinois-Indiana

• Year-over-year rental price change: -3.6%
• Median monthly rent: $1,776
• Income spent on rent: 24.6%
• Income spent on buying: 24.8%

Dallas-Fort Worth-Arlington, Texas

• Year-over-year rental price change: -3.5%
• Median monthly rent: $1,445
• Income spent on rent: 19.5%
• Income spent on buying: 29.3%

Phoenix-Mesa-Chandler, Arizona

• Year-over-year rental price change: -3.5%
• Median monthly rent: $1,488
• Income spent on rent: 20.4%
• Income spent on buying: 36.6%

San Francisco-Oakland-Fremont, California

• Year-over-year rental price change: -3.3%
• Median monthly rent: $2,708
• Income spent on rent: 24.3%
• Income spent on buying: 41.4%

Atlanta-Sandy Springs-Roswell, Georgia

• Year-over-year rental price change: -2.9%
• Median monthly rent: $1,565
• Income spent on rent: 21.4%
• Income spent on buying: 28.4%

Does Buying in These Areas Still Make Financial Sense?

With rental prices dropping, it’s worth exploring if it still makes sense to purchase a home in one of these areas. Here are a few key points to consider before making a decision.

Low Rents Could Be an Opportunity To Enter the Real Estate Market

Lindsey Harn, a real estate agent at Christie’s International Real Estate, said she’s a big believer in buying when the right opportunity comes along.

She added, “If rents are lower, landlords may finally be ready to sell their properties, which means you have more inventory and more options to consider when buying.”

If you’re looking for a place to live, this may be an excellent opportunity to get your foot in the door without competing with as many cash investors. Low rental rates could indicate that the local landlords aren’t making as much in profit and may be looking to liquidate their assets. This could be an ideal time to browse through listings to see if you could purchase a home for a lower listing price.

Buying May Help Stabilize Your Monthly Payments

Ralph DiBugnara, a real estate expert and president of Home Qualified, pointed out that renting has been cheaper than owning in major cities for longer than anyone expected.

He explained, “Even though this has been great news for renters, long-term rental will continue to rise, and the only way to fix your housing payment is to have financing or own real estate.”

DiBugnara believes your mortgage payment will be lower than rent payments in five years, which would help stabilize your monthly housing expenses. He also mentioned that renters will struggle to lower costs without downsizing their space, while homeowners could refinance at a lower rate in the future to bring down how much they’re spending.

DiBugnara said, “I believe owning will always be more advantageous than renting for long-term financial health.”

Consider Your Personal Situation

Even though rent prices are slowly decreasing in many major metros across the country, this doesn’t necessarily reflect your financial situation. As always, you should take into account your own personal situation before deciding on a significant investment like a home.

You’ll want to think about some of these factors before deciding if it makes sense to buy or rent:

• Your job stability: If your job isn’t stable or if you’re concerned about potential layoffs, you don’t want to commit to homeownership, because the expenses could quickly pile up.
• Your savings and debt: If you have consumer debt or if your savings account isn’t where you want it to be, you’ll want to continue focusing on saving up until you’re ready to commit to homeownership.
• Your lifestyle: If you’re looking to start a family or just want some stability in your life, purchasing a home may make sense.

It’s clear that the market is going through some changes. You want to ensure that you review all possible options with your living situation so that you make a decision that aligns with your needs and goals.