A new study released by RealtyTrac suggests that in most places across the United States, renters are better off buying a home than paying to rent a home. In fact, in 76% of US counties, buying has become more affordable than renting a home.
Currently, the average price of rent on a 3-bedroom property takes 28% of the average homebuyer’s median income. Rental prices have been rising of late due to the high demand across the nation.
With current low mortgage rates, a monthly payment on a median priced home—inclusive of a 10% down payment, property taxes, home insurance, and mortgage insurance—only took 24% of the average homebuyer’s median income. Basically, if a buyer can afford the down payment, there is very little positive to renting over buying in most US markets.
The Gallatin County and Bozeman may still offer advantages for renting, due to the rising home values of both single-family and multi-family properties in the area and high demand from out of town buyers. Home values have gone up nationally, but Bozeman has been outpacing national home value growth by a good margin.
Bozeman’s high demand as a top mid sized town in the US has continued to grow, leading to higher home values. Both Bozeman and its builders are working on solutions to make homes in Bozeman more affordable—both to rent and buy. General growth may not be the sole solution, as building permit applications and approvals have seen high numbers in the past years, but rental rates and home values have not fallen.
However, any financial advantage to renting in Bozeman has become razor thin due to the rising rental market and lack of spaces for rent.
Bozeman has seen higher rental prices due to its proximity to MSU. MSU enrollment hit an all time high this year, increasing demand for properties near campus. Not many college age students can afford to buy a home, raising rental rates in the area. Bozeman Public School enrollment has also increased, showing general buyer interest in Bozeman, helping keep prices high.
Many renters have had to look to Belgrade and other surrounding areas to find affordable rental prices.
Still, in general, for any renters who have saved any form of down payment, whether in Bozeman or the United States in general, now is certainly the time to consider home ownership and turn a never improving rental situation into an improvable, equity building investment.