Rent vs. Mortgage: Affordability Gap Widens
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Zillow’s Gudell: “Rents are crazy right now.”
SEATTLE—The gap between rental expense and mortgage expense continues to widen, with Zillow saying that rent payments take up a bigger slice of monthly incomes than ever in most major metropolitan areas. Renters in the US making a median income could expect to put 30.2% of their paycheck toward rent in the second quarter of this year, up from 29.5% a year ago and the highest average on record, according to Zillow.
By contrast, the US average across the 35 largest metros for a monthly mortgage payment is 15.1% of monthly income, or 50% less than the average rent payment’s share. The rate of mortgage affordability stayed basically the same over the past year, Zillow says.
In some metro areas—including Chicago, Dallas-Fort Worth, Philadelphia, Houston, Miami-Fort Lauderdale and Detroit—the gap between mortgage payments and rental payments is greater than 100%. Only in San Jose, CA is it cheaper to rent (41.5% of monthly income) than it is to buy (41.9%)…
