The post-pandemic relocation journey: how to decide whether to buy or rent

The relocation journey has been well studied but mobility teams continue to monitor how specific housing markets are impacting their mobile employees. One of the biggest decisions for a relocating employee in the journey is whether to buy or rent a home in their new destination. 

When considering rentals, there has been significant regional variation, but according to the June Apartment List National Rent Report, the national index increased by 2.3 percent from April to May, representing the third straight month of record-setting rent growth, going back to rent estimates in 2017. After this recent spike, year-over-year rent growth now stands at 5.4 percent nationally, and prices are now in line with where we expect they would have been if the pandemic-related rent declines of 2020 never occurred. Locations like San Francisco, where there was a dramatic drop in rents, seem to now be coming back up, and while San Fran is still 17% below March 2020, rents have increased 13% in the last four months. According to Apartment List, "pandemic (rent) pricing" is officially over!

While every market has to be looked at individually, Lending Tree shared that if you’re still paying off your mortgage, renting is cheaper than owning in each of the nation’s 50 largest metro areas. On average, renting is $606 cheaper than owning. New York, San Francisco and San Jose have the largest cost difference between renting and owning a home with a mortgage. Los Angeles and Boston were next in line for largest differences. It's about $1,200 cheaper to rent in those cities. On the other hand, Orlando, Tampa and Indianapolis are the metros where the gap between renting and owning a home with a mortgage is the smallest. Renters save an average of $335 a month. Jacksonville and Charlotte were next in line with the smallest differences.

Is the post-pandemic real estate boom reaching its climax? Well, let's consider this new national real estate data that our in-house real estate expert, Kelly House, shared recently and how it might impact those who hope to purchase a new home during their relocation process:

• Existing home sales fell 2.7%, which is the third straight month in which home sales have decreased. This is a result of record high prices and low inventory.
• The median home price is up 19.1% from a year ago and now sits at $341,600.
• On average, homes are selling in 17 days on market.
• We have seen a slight uptick in inventory levels to 2.4 months but still well below a balanced market.

Overall, the story has not changed. Nearly 50% of homes sold for more than their list price during the four weeks ending May 16. But there are signs that housing market demand may be reaching its peak, according to a recent study from Redfin. Realtor.com also shows that price growth is starting to slow. Many buyers are hoping that the days of home sellers basically setting their price and then getting above are over, or almost over. "Peak Pricing" would mean that prices can’t logically push higher from this point as we start to see more sellers looking to capitalize on these values. More homes coming to market will help balance and slow these price increases.  

For employees considering whether to buy or rent, here are a couple of resources to support their analysis:

• Is it better to rent or to own?
• Rent versus buy calculator

2021 has seen some of the fastest rent growth we have on record in our data. Purchase prices also remain at an all-time high with some believing we are close to hitting the peak, though it is definitely still a sellers market!