Skyrocketing rents and historically low mortgage rates have made it cheaper to buy a starter home than rent in many U.S. metro areas, and the Greater Hartford region is no exception.
According to a new study from Realtor.com, it costs central Connecticut residents an average of 16.4% more to rent than to pay a mortgage on a starter home, which in July had a national median listing price of $192,000.
Researchers found that the median monthly rent for a unit in the Greater Hartford area has risen sharply over the last year — up 7.7%, to $1,545. The price of a one-bedroom unit climbed 6.6% to $1,450, while a two-bedroom unit now runs for around $1,750, a 10.9% increase on a year-to-year basis.
Realtor.com researchers attributed the explosion in rental prices nationally to the COVID-19 pandemic and the work-from-home movement it has inspired. No longer required to report regularly to a physical office, many Americans have opted to leave large, high-priced cities, they said, and settle in more affordable, less congested areas, causing a surge in housing demand in what have long been deemed “secondary” markets.
That trend holds true in Connecticut, which has seen a huge influx of former New York City residents in the months since March 2020. Most of those transplants have settled in Fairfield County.
The financial advantage of owning over renting is clearest in places such as Pittsburgh, Orlando, St. Louis and Birmingham, Alabama, where the cost differential runs as high as 30% due to an abundance of starter homes, cheaper real estate prices and comparatively low homeowner association fees. Other metro areas that tend to favor homeownership, at least in the long term, include Atlanta, Chicago, Detroit, Indianapolis, Tampa and Riverside, California.
Still, in some of the nation’s most expensive cities, renting remains the better bet. Realtor.com found that in major tech and research markets such as San Francisco, San Jose, Seattle and Boston, renters were paying 40% to 47% less than homeowners.
