Zillow: Renters’ Financial Advantage Persists

(Image courtesy of Tim Mossholder/pexels.com)

Zillow, Seattle, reported that in August, the typical renter paid more than $1,000 a month less than the typical home buyer.

The typical U.S. rent was $1,948 a month, compared with the typical mortgage payment (plus taxes and insurance) at $3,014, rendering savings of $1,066 a month.

At that rate, renters save an estimated $12,792 a year over owning a home. And, to push that further, those who invest that cash at the rate of the 10-year Treasury yield would earn an extra $322 in the first year. And, if rents and home buying costs remain stable, that would turn into a cumulative total of $72,000 after five years.

“The idea that renting is a consolation prize is outdated. When mortgage costs are running hundreds of dollars more per month than rent, renters who are intentional about saving and investing the difference are often making a sound financial decision,” said Mischa Fisher, chief economist at Zillow. “Finances are just one piece of the puzzle. Those weighing their options should also consider the lifestyle differences, such as the flexibility to move more often as a renter or stable payments year after year as an owner.”

The savings range by area. In San Jose, Calif., renters save $7,883 per month compared to the typical homeowner. Next is San Francisco, with a $5,413 gap, Los Angeles, with a $4,441 gap, and San Diego, with a $4,235 gap.