The average Houstonian spends 12.3 percent of their monthly income on a mortgage payment, compared to 30.6 percent on a rent payment, according to the Seattle-based real estate company. A caveat, however: Zillow’s report doesn’t take into account other homeownership costs, such as property taxes, homeowner association fees, utilities and maintenance.
In fact, the Bayou City is one of the best cities in the country for people thinking about taking the leap from renting to buying a home.
Houston ranks No. 2 among 34 cities offering the biggest differential — or savings — between renting and buying a home. Only Miami residents can save more by switching from renting to buying.
Nationally, the average American spends 15 percent of their monthly income on a mortgage payment, compared to 30.2 percent on a rent payment.
Most Americans save money by switching from renting to buying homes. Pittsburgh is the only housing market where residents save slightly more by renting instead of buying.
Although it’s better to buy instead of rent, higher rental and home prices have made it more difficult for the average Houstonian to save up for a down payment. About one in 10 homes purchased in 2014 were made possible by loans and gifts from friends and family, according to Zillow.
Houston ranks No. 7 nationally among cities with the largest increase in home values. Home values in the Bayou City grew 8.9 percent year over year during the third quarter, according to Zillow.
The Bayou City’s rental market, particularly in the multifamily sector, has experienced similar increases in rent prices.
While rents and home prices have climbed to record levels, Houston homes arestill relatively more affordable than homes in other major cities nationally.
Houston’s average home value index is $167,000, which means renters are recommended to save at least $33,400 for a 20 percent down payment.
Nationally, the average home value index is $182,000, which means renters are recommended to save at least $36,500 for a 20 percent down payment, according to Zillow.
“In general, paying a mortgage is more affordable than renting, and has been for some time,” Svenja Gudell, Zillow’s chief economist, said in the report. “Unfortunately, many current renters aren’t able to realize the savings that come with homeownership because as home values and rents keep rising, it’s getting increasingly difficult to clear the down payment hurdle.”
By: Paul Takahashi