Why It's Cheaper to Rent in Many Markets: Rent Prices Have Dropped the Most in These 5 U.S. Metro Areas

According to a new report from national real estate brokerage HouseCanary, competition is easing in some U.S. markets as inventory grows, despite broad hikes in rental prices.

The median U.S. rent at the end of 2022 was $2,305, which was nearly 5% higher than the previous year. However, when compared to the end of the first half of the year, the median rent had declined by almost 6%.

According to HouseCanary, rent prices have cooled in some markets but have continued to grow in others, including metro areas along the East Coast and through the industrial Midwest.

According to Personal Finance, tax refunds may be lower than expected in the coming year. This is despite recent layoffs at major tech companies like Amazon, Google, and Microsoft. The Biden administration is also working on a renters bill of rights, which could provide some relief for those struggling to keep up with rent payments.

The median monthly single-family rental listing prices in these U.S. metropolitan real estate markets increased by the largest percentage from the second half of 2021 to the second half of 2022.

1. The median rent in Indianapolis, Carmel, and Anderson is projected to increase by 30.8% by the end of 2022. The median rent in these cities is currently $1,300, but is expected to reach $1,700 by the end of next year. This increase is likely due to the continued growth and popularity of these cities.

2. The median rent in Charleston, South Carolina is expected to increase by 25.3% by the end of 2022, to $2,750. This is based on current trends and market conditions.

3. The median rent in New Haven and Milford, Connecticut is projected to be $2,250 at the end of 2021 and $2,800 at the end of 2022, representing a 24.4% increase.

4. The median rent in Naples, Florida is expected to increase by 24.0% from 2021 to 2022, reaching $6,448. This is higher than the median rent for Marco Island, Florida, which is currently at $5,200.

5. The median rent in Pittsburgh is expected to increase by 23.2% by the end of 2022. This is a significant increase from the current median rent of $1,520. This means that the average rent for a one-bedroom apartment in Pittsburgh will be around $1,872 by the end of next year.

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The median monthly single-family rental listing prices in these U.S. metropolitan real estate markets saw the biggest year-over-year percentage decrease from the second half of 2021 to the second half of 2022.

1. The median rent in Memphis, Tennessee is expected to decrease by 5.8% in 2022, to $1,695. This follows a slight increase in 2021, when the median rent is projected to be $1,800.

2. Port St. Lucie, Florida is expected to see a decrease in median rent prices by the end of 2022, with prices falling to $2,650 from $2,800 at the end of 2021. This represents a 5.4% decrease in rent prices.

3. The median rent at the end of 2021 in Cape Coral, Florida will be $4,000. The median rent at the end of 2022 in Fort Myers, Florida will be $3,795. This is a rent decrease of -5.1%.

4. The median rent in Palm Bay, Melbourne, and Titusville, Florida is projected to be $2,300 at the end of 2021 and $2,200 at the end of 2022, for a decrease of 4.3%.

5. The median rent in Phoenix, Mesa, and Chandler, Arizona is projected to decrease by 2.1% from 2021 to 2022. The median rent at the end of 2021 is estimated to be $2,350, and the median rent at the end of 2022 is estimated to be $2,300.

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As rent prices fall and mortgage rates rise, it's become cheaper to rent than buy in many markets.

According to a recent report from Attom, a real estate data analysis firm, renting a three-bedroom home is more affordable than owning a comparable median-priced property in most of the country.

According to Realtor.com's December rental report, the median rental price in the United States is $1,712, which is nearly $800 cheaper than the monthly cost of a starter home. This report was published on Thursday.

Rick Sharga, executive vice president of market intelligence at Attom, said that the shift from cheaper to buy to cheaper to rent has been pretty dramatic. He pointed out that just one year ago, 60% of the markets Attom analyzed showed that it was cheaper to buy than rent. Sharga emphasized that the higher financing costs have had a significant impact on homeownership.

Mortgage interest rates have more than doubled in the last year, according to Freddie Mac. In January 2022, the average 30-year fixed rate mortgage was around 3% before jumping to over 7% in October and November. This is the biggest one-year increase in rates that Freddie Mac has ever seen.

According to Sharga, the recent interest rate increase has made monthly mortgage payments 45% to 50% higher for home purchases, even as home price appreciation has slowed. He added that this is probably the single biggest factor in creating the shift we are seeing in the market.

It's difficult to predict whether the economy is heading for a recession, which may shift financial priorities, experts say. However, conditions for homebuyers may be somewhat more favorable in 2023.

"It's important to remember that markets are always changing," said Keith Gumbinger, vice president of mortgage website HSH. "If you don't need to be in the market right now, it may be better to wait and see how conditions change."

There are many factors to consider when deciding whether to rent or buy a home.

‍"The decision on whether to rent or buy is always a matter of timing," he said. "And more importantly, it's a matter of need."