Austin and Sacramento Lead Markets Where Renting Costs Over $1,000 Less Than Buying

The housing market in Austin, Texas, has attracted some of the strongest demand in the country, and Dillar Schwartz, an eXp real estate agent in the area, explains the local market conditions for homebuyers and renters.

Homebuyers and renters across the country are navigating a challenging affordability landscape, and a recent report identified seven markets where renting emerges as a significantly more cost-effective option than homeownership.

An analysis by Apartments.com identified the cities of Austin, Texas; Sacramento, California; Denver, Colorado; Portland, Oregon; Baltimore, Maryland; Salt Lake City, Utah; and Orlando, Florida, as metro areas where the average monthly rent is notably lower than the median monthly mortgage payment.

The two markets that top the list, Austin and Sacramento, share the distinction of having average rents that are more than $1,000 lower than the median monthly mortgage payments.

Austin’s median monthly mortgage payment is $2,475, while the average monthly rent was $1,421, leading to a difference of $1,054. In Sacramento, the median monthly mortgage payment is $2,621 compared to an average rent of $1,579 per month, giving renters a $1,042 edge in affordability.

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Sacramento and Austin were the two markets with the largest difference between the cost of buying a home and renting. (David Paul Morris/Bloomberg via Getty Images)

Dillar Schwartz, an eXp real estate agent based in Austin, told FOX Business in an interview that the housing market in central Texas remains very active for both homebuyers and renters.

“We have seen an uptick in rental leads and rental inquiries, and right now, they’re across the board. They’re relocating, they’re wanting to try different subdivisions. They’re moving here for work, and there’s not one big industry that’s moving people here,” Schwartz said.

“In terms of buyers and sellers, I’m seeing more first-time homeowners come through. We’re seeing a lot of the renters who inquired, and we helped find homes about two years ago, they’re now working on getting into homeownership,” she explained, noting that there’s a “really nice mix of sellers” with listings across price points.

“There’s a nice blend. However, I feel like this blend didn’t happen until about four or five months ago – there were a lot of people just on the sidelines,” she added.

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For prospective homebuyers and renters exploring the Austin area, Schwartz emphasized that one of the first questions her practice addresses is the cash reserves available to home shoppers given the associated costs.

“Right now, due to Texas insurance, property taxes and the rates being high, the cost right out the gate to get in a home without even discussing a down payment is fairly high, and that trickles into the monthly payments,” Schwartz said.

The area around Austin, Texas, remains in high demand for renters and homebuyers. (Rick Kern/Getty Images)

She noted that while housing prices in Austin have declined, these costs can still surprise buyers once they discuss terms with lenders. Although rental rates have also softened, they present a financial hurdle for those seeking apartment housing.

Schwartz explained that for a downtown apartment renting approximately $2,000 monthly, a prospective renter would typically be required to cover the first month’s rent, a security deposit roughly equal to the monthly rent, plus application and background check fees potentially totaling around $100 per person.

“When you add all of those costs, the average renter is going to need about $5,000 cash as well to make that move,” she said, noting that this requirement can create barriers for certain consumers.

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Schwartz stated that within most of central Texas, her practice can locate rental properties where monthly costs remain more affordable than purchasing a home.

The Austin real estate market maintains solid housing inventory levels for both prospective buyers and renters, with the region implementing measures to relax regulatory obstacles for expanding housing supply in recent years.

Texas has taken steps to ease regulatory barriers to increase housing inventory. (Joshua Lott/Bloomberg via Getty Images)

She mentioned that the city recently added a staff member to the permitting department designed to speed up processes for homebuilders and property flippers, while also expanding opportunities for infill development on existing lots.

“In Austin right now, if you truly do need to buy a home and want to invest in yourself and start building that wealth, all it takes is time and patience by working with a true professional – there are deals out there,” Schwartz said.

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The same principle applies to renting, she added, emphasizing that demand remains robust and renters must still maintain adequate cash reserves for securing housing.

“The opportunity is there. The Austin market just takes a little bit more time and patience to navigate,” she concluded.

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