Renting is now cheaper than buying in Richmond
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Rejoice, Richmond renters. It's now significantly cheaper to rent than buy in this town, according to a new report from Realtor.com.
Why it matters: This could be welcome news to first-time buyers who've been locked out of the homebuying market due to years of low inventory and over-asking offers.
The big picture: It's not just Richmond. It's more affordable to rent a starter home than to buy one in all 50 of the nation's largest metros, the Realtor.com report found.
- That's due to elevated mortgage rates, ever-climbing home prices and the fact that median rent is actually falling (albeit barely).
Stunning stat: Richmond renters could be saving $1,107 a month over what first-time buyers end up paying in the current housing market, per the report — the most of every other metro.
What they did: To determine the cost of buying, Realtor.com used median list prices for two-bedroom or smaller homes (i.e., starter homes), assumed an 8% downpayment, a 6.78% mortgage rate, and the average cost of taxes and insurance.
- Rent price was determined from February listings for studios and one- and two-bedrooms as advertised on Realtor.com.
By the numbers: The median rent in Richmond in February was $1,491.
- $2,598 was the monthly cost to own a home using the above figures.
- 74% is how much less it costs to rent than buy in Richmond.
The fine print: The study is not suggesting that renting is particularly cheap (or cheaper) in Richmond. Rather it reflects the increasing out-of-reach cost of buying a home in today's market. Especially in Richmond.
Yes, but: Median rent dropped in Richmond as of February, Realtor.com found — by 0.4% year over year.
- That translates into $6 less a month.
What we're watching: How local renters, flush with that extra $6 a month, spend their big savings.