Priced Out: In most of Arizona, renting a home is cheaper than buying

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Posted at 6:14 PM, Aug 18, 2022
and last updated 2022-08-18 21:14:47-04

There are areas in the U.S where it is cheaper to buy a house than it is to rent. Phoenix is not one of them.

A report by the real estate company Roofstock crunched numbers together from the US Census, HUD, and Zillow to find where in the US it was cheaper to get a mortgage on a median priced home than it was to rent. Unsurprisingly, the large metros where renters should think about buying are mostly found in the South, Mid-Atlantic, and Midwest. In Pittsburgh, a mortgage on a median priced home assuming 20% down and an interest rate of 5.33%, costs around $933. Renting in the same area would cost $1,063. The other top listed metros where a mortgage can be cheaper than renting were Rochester, Detroit, Oklahoma City, and Memphis.

Where does Arizona fit in? Roofstock found that Yuma is one area where mortgages were cheaper than rents. It was ranked 91 out of the 257 metros ranked.

That doesn’t mean that Arizona rents are cheap. According to data from Zillow, Phoenix area rents were under one thousand dollars in 2014, well under the median for the US. In 2021 however, rental prices spiked, with Phoenix seeing a 28% increase with median rents ultimately landing at around two thousand in July of this year.

All major southwestern markets saw similar spikes. Rent in Phoenix and Las Vegas tightly trend with the other. Tucson went from $1,300 in early 2021 to about $1,650 and Los Angeles, always significantly higher, saw an increase of 20% from about $2,400 to almost $3,000.

The highest rents in the valley of the sun are mainly found in the Northeast valley. Cave Creek rents are close to Los Angeles at around $3,000. Scottsdale median rents are $2,400 while Fountain Hills and Gilbert were both around $2,300. The cheapest rents according to Zillow are in the larger cities. Tempe, Glendale, Phoenix, and Mesa all have median rental prices ranging from $1,800 to $1,900 a month.

When Zillow tracks rentals, it includes both single family and multi-family housing units. The measure used is the median price, which means that there will be about an equal number of rentals priced over and under the number.