Renting vs Buying in Austin - Which Makes More Financial Sense?
Published | Written by Dan Price
July 15, 2023 : I often get asked by renters if it makes more financial sense to continue renting or to buy a home. Based on a detailed analysis of median incomes, median rents, and estimated mortgage payments across Austin metro area cities and zip codes, there are some clear insights for renters.
Overall, in 14 out of 30 analyzed cities and 28 out of 75 zip codes, the estimated monthly mortgage payment (PITI) is actually lower than the median rent amount. This suggests that in many areas, buyers can pay less per month to own rather than rent the same property.
Specifically looking at the city of Pflugerville, the median household income is $98,610 and the median monthly rent is $2,308, comprising 28.1% of income. The estimated mortgage payment (PITI) based on a 20% down payment, 0.68% homeowners insurance, the median home price, and Pflugerville's average tax rate is $2,258 per month, or 27.5% of median income. This means Pflugerville buyers would pay $51 less per month compared to renting.
In zip code 78749 in Austin, the median household income is $112,813 and the median monthly rent is $2,914, which takes up 31.0% of income. The estimated PITI is $2,847 per month, or 30.3% of median income. This results in $68 per month savings for buyers in 78749 versus renting.
The analysis uses a 20% down payment on the median active listing price, 0.68% for homeowners insurance, and the specific city or zip code average tax rate. It shows that buyers in many Austin areas can expect monthly savings compared to renting.
We invite you to reach out for information on buying costs for specific properties or neighborhoods. We are happy to assess your situation to see if buying could save you money each month!?