Summer can be prime time for house hunting, but buyers in two big U.S. cities would be better off renting.
The advantage of buying over renting is at a six-year low across the nation, thanks to the combination of soaring home prices and declining rents in some cities, according to a new analysis from Trulia. Those trends have narrowed the savings from buying a home in each of the biggest U.S. cities, the real-estate service found.
Trulia found there are now two cities where residents are better off renting: San Jose, California, and San Francisco. The typical home value in those cities have surged to more than $1 million, while rents are stabilizing or declining. The topsy-turvy situation comes as abecause of the sky-high housing prices.
"One point deserves emphasizing: The ultra-costly San Francisco Bay Area is not a harbinger for the nation as a whole," noted Trulia senior economist Cheryl Young in an analysis of the data.
Nationally, it's still 26 percent cheaper to buy than to rent -- but that's down from about 36 percent a year earlier, Trulia said. Rents have declined 1.1 percent while home prices have surged 8.1 percent, which led to the pared savings from buying.
There are also a handful of cities where the savings from buying are much slimmer than the national rate, Trulia found. For instance, it's only 2 percent cheaper to buy in Honolulu, another city known for its high cost of living. Seattle's housing market is only 10 percent cheaper than renting, while it's only 14 percent cheaper to buy than rent in Portland, Oregon.
Even in markets where it's cheaper to buy, home hunters are likely to. Toss in rising mortgage rates, and it's no surprise that some Americans are opting to sit on the sidelines.
In some case, it's not by choice. More familiesbecause they can't find an entry-level home or afford the downpayment for a property. The U.S. had more than 14 million renter households with children in 2016, up nearly 2 million from 2006, just before the Great Recession, according to a recent study from RentCafe.
House hunters "may take a little longer to decide whether this is the right time to take out a mortgage or sign a lease," Trulia's Young added.
Below are the 10 markets where the greatest percentage savings come from buying vs. renting:
Detroit: -48.9 percent (it's 48.9 percent cheaper to buy here than to rent)
Baton Rouge, LA: -47.6 percent
Columbia, SC: -45.5 percent
New Orleans: -44.5 percent
West Palm Beach, FL: -43.5 percent
Greenville, SC: -43.4 percent
Charleston, SC: -42.8 percent
Philadelphia, PA: -42.6 percent
Cape Coral-Fort Myers, FL: -42.4 percent
North Port-Sarasota, FL: -42.1 percent
And below are the 10 markets where the percentage savings from buying vs. renting are the smallest:
San Jose, California: +12.2 percent (it's 12.2 percent cheaper to rent here than to buy)
San Francisco: +5.8 percent (5.8 percent cheaper to rent)
Honolulu: -2 percent (2 percent cheaper to buy)
Seattle: -10 percent
Portland, OR: -13.8 percent
Madison, WI: -14.7 percent
Milwaukee, WI: -15.5 percent
Sacramento, CA: -15.8 percent
Oakland, CA: -16.3 percent
Las Vegas, NV: -16.8 percent