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It’s a frequent topic of debate: Is it technically cheaper to rent or buy? The answer is, of course, complicated. But on a month-to-month level, is it cheaper to own than rent?
A new study by real estate listing site Zillow found that while nationwide a typical renter can buy a home 50 percent more expensive than median and keep their monthly housing costs the same, that’s not the case in Seattle.
Zillow pegs Seattle’s median rent at $2,540 per month—and by their calculations, to keep monthly housing costs the same, the typical renter would need to buy a home valued at $519,310. That takes into account a 30-year mortgage with prevailing interest rates, property taxes, insurance, and some maintenance costs.
The problem gets bigger, though: Houses that would save renters money on a monthly basis only make up about a quarter of Seattle’s housing market. Median home values are climbing; Zillow says they’re currently $638,100.
Of course, this isn’t typical in all cases. Every person’s situation is different, and many can’t afford that median rent price to begin with.
But comparing typical case to typical case, it would appear that Seattle’s skyrocketing home values are outpacing even our incredibly high rental prices.
That’s not to mention the money for a downpayment. Another Zillow study earlier this month found that saving for a downpayment is the biggest barrier to homeownership—which shouldn’t be too surprising. Even the biggest security deposits pale in comparison to 10 percent, or even three percent, of a typical Seattle home price.
Ready to throw in the towel and buy a home across the country? In Milwaukee, where the median home value is just $105,000 per year, 86 percent of their housing inventory is affordable to the typical renter. We hear there’s a lot of beer there.