SoFi

Despite the Fair Housing Act of 1968 and other federal laws, a large race gap in homeownership continues to exist across the United States. The Black homeownership rate in the fourth quarter of 2022 stood at 44.9%, compared with 74.5% for non-Hispanic whites, according to the U.S. Census Bureau.

The Black-white race gap in homeownership rates widened as the Federal Reserve attempted to bring inflation under control — going from 29.3 percentage points in the first quarter of 2022 to 29.6 percentage points in Q4. Average mortgage interest rates generally increased in 2022 after the Fed implemented a series of rate hikes.

These racial disparities are not new. Historical records confirm a large race gap in homeownership rates has existed since the abolition of slavery. Below we further examine the race gap in homeownership and identify possible solutions.

History of Racial Housing Disparities

The United States has a long history of systemic racism that presents itself in a number of ways, including housing disparities. In January 2022, the National Community Reinvestment Coalition released its home mortgage report examining racial disparities in homeownership from 1900 to 2020.

The NCRC found the gap in homeownership rates between Black and white families reached its lowest level of 23 percentage points in 1980 and its highest level of 30 percentage points in 2015.

In the fourth quarter of 2021, the Black-white race gap in homeownership rates exceeded 31 percentage points. This gap narrowed to 29.6 percentage points in the fourth quarter of 2022, according to data released by the U.S. Census Bureau.

The homeownership rate as of Q4 2022 stood at 74.5% for non-Hispanic white households; 61.9% for Asian, Native Hawaiian, and Pacific Islander families; 48.5% for Hispanic families of any race; and 44.9% among Black households, according to the Census data.

A number of factors have contributed to the race gap in homeownership, including the legacy of race-based discrimination in the housing market.

Lasting Effects of Redlining

Redlining, the discriminatory practice of denying home loans and other credit services to ethnically diverse neighborhoods based on the race, color, or national origin of the residents of those neighborhoods, is one of the factors explaining America’s long-standing race gap in homeownership.

The federal government institutionalized redlining in the 1930s when a now-defunct federal agency, the Home Owners’ Loan Corp., created “residential security maps” in dozens of cities across the country to systematically deny mortgages in neighborhoods of color.

HOLC ceased to exist in 1951, and Congress later outlawed redlining with the Fair Housing Act of 1968, but lending discrimination in the housing market has persisted.

An article published in the journal SSM-Population Health in June 2021 found that “redlining has continued to influence racialized perceptions of neighborhood value and practices that have perpetuated racial inequities in lending.”

“Decades of racism in the housing market,” the article adds, “have prevented people of color, particularly Black Americans, equal access to capital, low-cost loans, and homeownership.”

The Department of Justice continues to enforce the Fair Housing Act to address ongoing allegations of modern-day redlining.

Current Black Homeownership Gap

As mentioned, the current race gap in homeownership rates between Black and white families is 29.6 percentage points as of Q4 2022. The vast majority of white families own residential property, while the majority of Black families do not, data shows.

Homeownership is often regarded as the American dream, but not everyone who wants to buy a house is able to get financing. The overall denial rate for home-purchase loans among all applicants in 2021 stood at 8.3%, according to the Consumer Financial Protection Bureau.

Bureau data shows that 15.3% of Black applicants had their mortgage loan requests denied in 2021, compared with 6.3% of non-Hispanic white applicants.

This first-time homebuyer guide recommends downloading your credit reports before submitting any applications for home loans. Creditworthy applicants who have home loan applications denied may be victims of discrimination. You can get free credit reports at AnnualCreditReport.com and can check your credit scores in several ways.

Homeownership by Race

The below table highlights homeownership data by race as of Q4 2022

Race	Homeownership rate
Non-Hispanic white alone	74.5%
Asian, Native Hawaiian, and Pacific Islander	61.9%
Hispanic (of any race)	48.5%
Black alone	44.9%
Other (including mixed races)	58.7%
All (nationwide population)	65.9%

Fixing the Black Homeownership Gap

The Urban Institute, a nonprofit research organization, has a five-point framework aimed at reducing the Black homeownership gap. Here are the five points:

1. Advance Local Policy Solutions

Local policy reforms, including the removal of any discriminatory terms in homeowner and condominium associations and possible property tax relief for low-income and moderate-income taxpayers, can help reduce the Black homeownership gap.

Expanding small-dollar mortgages could also make a difference.

2. Tackle Housing Supply Constraints and Affordability

Promoting affordable housing nationwide, including new investments in historically segregated and devalued neighborhoods, may help reduce the Black homeownership gap.

Public policy leaders could also review the viability of lease-to-own programs as a pathway to homeownership.

3. Promote an Equitable and Accessible Housing Finance System

Greater access to down payment assistance programs for economically disadvantaged consumers may reduce the Black homeownership gap.

This online mortgage calculator shows how home loan seekers can lower their monthly mortgage payments and total interest charges by making a larger down payment on a home.

Recommended: Do You Still Need to Put a 20% Down Payment On a House?

4. Accelerate Outreach for Mortgage-Ready Millennials

Reaching out to mortgage-ready millennials and improving tax credit incentives for renters to become homeowners may help reduce the Black homeownership gap.

Public-private partnerships can scale up additional programs aimed at bolstering homeownership among low-income people.

5. Focus on Sustainable Homeownership and Preservation

Funded programs that prevent foreclosures in the United States may particularly help Black homeowners maintain their wealth.

Providing homeowners of color with financial literacy may also help preserve homeownership among Black families.

The Takeaway

Racial housing disparities persist, despite federal laws designed to equal the playing field. The effects of redlining echo today, when 74.5% of white families own residential property and just 44.9% of Black families do. Solving this social inequity may require significant action and reform. See how employers can help first-time homebuyers.

If you’re looking for a mortgage lender, SoFi can help you achieve the American dream. Qualified first-time homebuyers can put as little as 3% down.

Explore SoFi fixed-rate mortgage options and view your rate in minutes.

---

Photo credit: iStock/Morsa Images

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

SoFi Mortgages
Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility-criteria for more information.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .

SOHL0222027

Read more

For sellers, the idea of multiple offers on the home they’ve put on the market is a dream. But for buyers, it can be a big source of stress: How can you get your bid to stand out and be the one selected? This is especially challenging in today’s seller’s market, when bidding wars and stiff competition has become more common.

So do you want to know how to compete against multiple offers on your dream house? You’re in the right place.
Here, you’ll learn some strategies and secrets that can help give you a competitive edge, from boosting your earnest money to waiving contingencies.

Read on to find out:

•   How to compete against multiple offers in a buyer’s and a seller’s market

•   How to collaborate most effectively with a buyer’s agent

•   How to increase your chances of competing against multiple offers on a house.

Multiple Offers in a Seller’s Market

A seller’s market means the demand for houses is greater than the supply for sale, causing home prices to increase and often giving sellers a serious advantage.

It can get pretty competitive for those who need to buy a house, and multiple offers on a house become the new norm.

Seller’s markets and the frequency of multiple offers can happen for a few reasons:

•   More houses typically go up for sale during peak homebuying season in the summer, so seller’s markets are more common in the winter when inventory is low.

•   Cities that see steady population growth and increased job opportunities often experience a higher demand for housing, leading to multiple interested buyers making offers on limited inventory.

•   A decrease in interest rates could mean more people are able to qualify for mortgages, causing an uptick in homebuyers that might work to the seller’s advantage. More interested parties can mean more negotiation power.

As of the end of 2022, despite rising interest rates and waning home construction, there has nevertheless been a hot market, with demand outstripping supply. According to NAR (the National Association of Realtors®), one in four houses on the market receives enough bids to sell above asking price – a significant amount of competition.

Multiple Offers in a Buyer’s Market

In a buyer’s market, there’s a greater number of houses than buyers demanding them. In this case, homebuyers can be more selective about their terms, and sellers might have to compete with one another to be the most sought-after house on the block.

In a buyer’s market, house hunters typically have more negotiating power. The number of offers on the table is usually lower than in a seller’s market, and the winning bid is often lower than the listing price.

In other words, you are likely to be better positioned to get a good deal.

Are Buyers’ Agents Aware of Other Offers?

Unless house hunters are buying a house without an agent, there are certain cases where the buyer’s agent could be tipped off to other offers on the house. This insight could help you hone your offer to be the winning bid.

A lot of it depends on the strategy of the sellers’ agent and whether it’s designed to stir up a bidding war with obscurity or transparency. Either way, the sellers and their agent could choose to:

•   Not disclose whether or not other buyers have made offers on the property.

•   Disclose the fact that there are other offers, but give no further transparency about how many or how much they’re offering.

•   Disclose the number of competing offers and their exact terms and/or amounts.

It’s up to the sellers and their agent to decide which strategy works best for their situation and, according to the National Association of Realtors® 2020 Code of Ethics & Standards of Practice, only with seller approval can an agent disclose the existence of other offers to potential buyers.

However, as you might guess, it can stir up more heated bidding if it is revealed that there are multiple offers. A prospective buyer might learn that intel and hike up their bid or offer other concessions, such as foregoing an inspection.

How Do Multiple Offers Affect a Home Appraisal?

What happens in the event of an all-out bidding war? Say a house comes on the market where few other properties are available, and it has all kinds of dream amenities: an outdoor pizza oven and slate patio, the perfect family room with a wall begging for a ginormous flat screen, a spa-style bathroom with soaking tub, and all kinds of energy-efficient bells and whistles.

Some buyers may be tempted to keep increasing their offer to one-up the competition. Unfortunately, this could lead to drastically overpaying for the house. And when it comes time for the mortgage lender to approve the loan, they may think the home isn’t worth all that money.

In these cases, buyers can add an appraisal contingency to their offer, asserting that the appraised value of the property must meet or exceed the price they agreed to pay for it or they can walk away from the deal without losing their deposit.

But what about in competitive seller’s markets when making mortgage contingencies could mean losing the deal? In those cases, buyers might have to put down extra money to bridge the gap between what their lender is willing to give and what they offered.

Think carefully in this situation about what you would do if the only way to nab your dream home would be to come up with more cash. For some people, it might be possible (perhaps by borrowing from family); for others, it would mean walking away or risk overextending oneself and blowing one’s budget.

Recommended: Home Affordability Calculator

How Can Buyers Beat Other Offers on a House?

Are you wondering, “But how can I compete against multiple offers on a house?” There are a few things homebuyers can do to improve their odds of winning when there are multiple offers on a house. Consider the following options:

A Sizable Earnest Money Deposit

Earnest money is a deposit made to the sellers that serves as the buyers’ good faith gesture to purchase the house, typically while they work on getting their full financing in order.

The amount of the earnest money deposit generally ranges between 1% and 3% of the purchase price, but in hot housing markets, it could go up to 5% to 10% of the home’s sale price.

By offering on the higher end of the spectrum, homebuyers can beat out contenders who offer less attractive earnest money deposits.

Best and Final Offer

Going into a multiple-offer situation and expecting negotiation can be tricky. It’s typically suggested that buyers go in right away with their strongest offer; one they can still live with if they lose to a contender — aka, they know they gave it their all.

In some cases, sellers deliberately list the home for less than comparable sales in the area in an attempt to stir up a bidding war. By going in with their highest offers, buyers could end up paying what the house is actually worth while still winning the deal.

Recommended: 7 Steps to Buying a Home

All-Cash Offer

By offering to pay cash upfront for the property, homebuyers effectively eliminate the need for third party (lender) involvement in the transaction. This can be appealing to sellers who are looking to streamline the sale and close ASAP.

However, this is obviously not possible for all homebuyers. It requires having quite a chunk of change on reserve to make this kind of offer. For some though (including those who just sold another property), it could be an option.

Waived Contingencies

Whether it’s offering the sellers extra time to move out or waiving the home inspection, potential homebuyers can gain wiggle room when they start to waive contingencies.

Contingencies are conditions that must be met in order to close on a house. If they’re not met, the buyers can back out of the deal without losing their earnest money deposit.

By waiving certain contingencies, buyers show that they’re willing to take on a level of risk to close the deal.
This can be appealing to some sellers. Of course, if you are the prospective buyer in a multiple-bidding situation, it means you are taking on risk.

What if, say, after you purchase the home, you discover that there’s $10,000 worth of HVAC work that needs to be done? An inspection would likely have revealed this, and you would have been able to negotiate with the sellers about this. But when you waive the inspection, you will be on the hook for this kind of upgrade.

Recommended: 6 First-time Home-Buying Mistakes to Avoid

Signs of Sincerity and Respect

Because many sellers have pride in and a deep affection for their home, buyers who show sincerity, respect, and sentiment may score extra points.

In some cases, it may be helpful for bidders to write a letter that details what they love about the home, which adds to the positive interactions with the sellers and their agent. It can make the sellers feel as if their home will be in good hands, with people who appreciate it rather than want to do a gut reno and strip away all the features they treasure.

This could lead to winning in a multiple-offer situation, but seek your real estate agent’s advice before penning such a letter. It could be a turn-off to some sellers.

An Offer of Extra Time to Move Out

In some cases, sellers might appreciate (or even require) a bit of a buffer between the closing date and when they formally move out of the house.

By offering them a few extra days post-closing without asking for compensation, flexible buyers can get ahead of contenders who might have stricter buyer possession policies.

Or you might offer to lease back the property for a month or more, if that would help the sellers get settled in their next residence. This kind of flexibility could tip the balance in your favor.

A Mortgage Pre-Approval Letter

Most offers are submitted with a lender-drafted letter that indicates the purchasers are pre-qualified for a loan.

But did you know there’s a difference between getting pre-qualified vs. pre-approved? A pre-approval letter can take it a step further by showing that the buyers are able to procure borrowed funds after deep financial, background, and credit history screening.

Pre-approval signifies to some sellers that the buyers can put their money where their mouth is, lessening the possibility of future financing falling through.

Recommended: Guide to Buying, Selling, and Updating Your Home

Kick-Starting the Homebuying Process

If you’re shopping for a home or plan to do so in the near future, it’s a wise move to get a jump on the process by exploring your mortgage options. For instance, how much of a loan do you qualify for and at what interest rate? How much would you have to put down?

As you move through this process, see what SoFi Mortgage Loans can offer. Our loans are convenient loans and have competitive rates. Plus, they can be available to qualifying first-time homebuyers with as little as 3% down. By knowing what your home loan funding looks like, you may be able to bid with greater confidence.

Get a leg up on buying a home, and find your rate in minutes with SoFi Mortgage Loans.

---

SoFi Mortgages
Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility-criteria for more information.

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

SOHL20045

Read more

Congratulations; You’ve found a house you love and want to buy. You may even be in the final stages of closing on this dream home. But sometimes, you may need to access what’s known as an escrow holdback: a way of setting aside funds at the closing for repairs that are most definitely needed as you take ownership.

For example, what happens if a blizzard hits the week before your scheduled closing, revealing a leaky roof that needs major (pricey) repairs?

This wasn’t something that showed up in the initial inspection report. Or, maybe it did show up in the inspection report, but the issue is suddenly much more pressing in light of said snowstorm. Either way, these repairs can’t be made at this particular time because it’s winter and, well, it’s snowing outside.

What’s a buyer to do? In this scenario, an escrow holdback could be a path to funding the necessary repairs without blowing your closing date. Here, you’ll learn more about escrow holdbacks, including:

•   What is an escrow holdback?

•   How does an escrow holdback work?

•   What qualifies for an escrow holdback?

•   What if your situation doesn’t qualify for a holdback?

Escrow Holdbacks Defined

Before defining escrow holdbacks, here’s what escrow is: Typically, it’s money held by a third party as assets (such as real estate) are being transferred.

An escrow holdback agreement, however, occurs when money is set aside at the closing of a home to complete repairs. Generally, this is done at the seller’s expense, though not always.

Money is held in an escrow account until the repairs are completed. The funds can then be released. Another name for an escrow holdback that you may hear used is a repair escrow.

This may sound like a pretty good arrangement, but an escrow holdback isn’t a possibility for every borrower and in every scenario. Consider the following:

•   The lender’s underwriter will review the appraisal and any accompanying inspection reports to confirm that the sales price is met and that the property does not show evidence of any deferred maintenance items that can have an effect on things like safety, soundness, or structural integrity.

•   These are often referred to as health and safety issues. Health and safety issues can affect whether the home is eligible for financing.

•   Most lenders will not close a loan on a home that has been called out for things like missing railing, stairs, fencing, and much more.

It’s not hard to imagine a situation where a homebuyer needs the seller to repair something that cannot be completed until after the contract’s closing date, like in the snowstorm example above. Depending upon the repair, a lender may allow for the seller to place funds in escrow for what’s known as defect cure within a specified period of time for a specified amount.

These repairs could be expected or unexpected as the parties move through the home-buying process. Generally, the appraiser calls out the more obvious issues that hurt a home appraisal and may recommend further inspection by an expert for something noted in their report. If an appraiser requests an inspection, the lender’s underwriter may review the report and require some repairs.

Another example of a situation in which an escrow holdback could be a valuable tool: when a seller needs the proceeds from the sale of the home in order to comply with the repair request.

These are examples of how and when an escrow holdback could be warranted and beneficial.

Recommended: 31 Ways to Save for a Home

How Does the Escrow Holdback Process Work?

If you’re curious about how the escrow holdback process works, consider these points that spell out the process in more detail:

•   Normally, the first step is the buyer’s and seller’s agents negotiating any required repairs through an addendum to the purchase contract. This is drawn up by the real estate agents and signed by all parties.

•   The document will likely outline the repairs that the buyer (or lender) would like the seller to make, the timeframe for those repairs, and details about how and when the payments to the contractors are to be made.

•   This contract addendum is then sent to the escrow company (or the attorney) and to the lender, who will review the document. The underwriter of the loan will have the last say as to whether the escrow holdback is approved.

•   If it is approved, then the closing may proceed as initially planned. However, not all holdback requests will be approved.

   The lender may have conditions around the approval of an escrow holdback. These can include but are not limited to such requirements as improvements having to be completed within 180 days of the mortgage closing date.

•   The lender will likely establish an escrow completion account with the title company from the purchase proceeds. This is typically equal to 120% of the estimated cost for completing the improvements and more.

•   Once the repairs are completed, another inspection occurs to verify that the work has been satisfactorily finished. The escrow account can then release the funds.

It’s important to note that not all transactions qualify for an escrow holdback. The criteria can vary between lenders, property, and even type of transaction (sale of existing property or of a new construction home).

Recommended: What to Look for When Buying a House

What Qualifies for an Escrow Holdback?

Generally, lenders prefer that repairs take place prior to the closing, but exceptions can be made — like when repairs must be delayed due to inclement weather.

This may limit escrow holdbacks to repairs that require some work on the outside of the home, such as repairs to a roof, yard, or plumbing accessed outdoors.

Here are some types of repairs that are factors that affect property value and residents’ safety and may qualify for an escrow holdback:

•   Patio problems

•   Pest control

•   Roof repair

•   Septic tank issues

•   Sprinkler system problems

•   Yard cleanup

Again, there are no sure things or guarantees of how an escrow holdback will work. That’s because it is ultimately up to all of the involved parties to agree on the terms.

Beyond the weather causing a delay, lenders are often looking to determine whether the repairs present a risk to the property (their collateral) or present health and safety issues to the prospective occupants. As you might imagine, a lender generally won’t want to make a loan for a property that they believe could threaten the health or safety of its occupants.

Recommended: The 7 Steps to Buying a House

What if Your Situation Doesn’t Qualify for a Holdback?

Say you believe there is an issue that merits an escrow holdback, but the lender doesn’t approve it. Now what? There’s not much, unfortunately, that you can do in this situation. The most likely scenario is that the closing date will need to be pushed out to make time for any required repairs before loan closing.

As you pursue an escrow holdback, it might be helpful to understand that some lenders’ guidelines may not offer escrow holdbacks under any conditions.

This could be due to such issues as the follow-up involved in closing the holdback proves too arduous. Or perhaps there are difficulties in getting the repairs completed within the specified period of time given. If lenders have been burned in any of these ways in the past, they may decide the process is too risky.

In the event that a lender refuses an escrow holdback agreement, you might have to delay your closing. If the lender also refuses to make a loan, you (the buyer) could be in a very tough spot. Even if you’re willing to pay for the cost of repairs in order to move forward with the lending process, this may not be in your best interest.
You do not yet own the property, and issues can arise from making repairs.

It may be wise to get your real estate lawyer’s and real estate agent’s opinions about how to handle this kind of difficult situation. They can help you explore any options that exist.

Recommended: First-time Homebuyer’s Guide

The Takeaway

Escrow holdbacks can be a way to solve for needed repairs of a property you are interested in buying or have already begun to purchase. By keeping funds in this kind of account, the parties involved may be able to satisfactorily complete the work needed and pay for it in a clear and equitable way.

No matter your situation, you’ll likely want to work with a lender that can help you navigate the home-buying process. While you’re shopping for a mortgage, check out customer service reviews in addition to rates and terms.

SoFi offers mortgage loans with competitive rates and low down payment options. Plus, the process is simple, quick, and convenient.

Looking for an affordable mortgage loan that you can access easily? See what SoFi has to offer!

---

SoFi Mortgages
Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility-criteria for more information.

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

SOHL0822015

Read more

Better to buy or rent? The price-to-rent ratio is a reference point that can help gauge affordability in any city — especially for people on the move. More specifically, the price-to-rent ratio can be helpful when looking at a certain area and deciding whether to sink your life savings into a home, or pay a landlord and wait to buy.

Read on to see the home price-to-rent ratio in some of the biggest U.S. cities.

First, What Is the Price-to-Rent Ratio?

The price-to-rent ratio compares the median home price and the median annual rent in a given area. (You’ll remember that the median is the midpoint, where half the numbers are lower and half are higher.) To make sense of a city’s price-to-rent ratio, here’s a general idea of what the number suggests:

•   A ratio of 1 to 15 typically indicates that it’s more favorable to buy than rent in a given community.

•   A ratio of 16 to 20 indicates that it’s typically better to rent than buy.

•  A ratio of 21 or more indicates that it’s much better to rent than buy.

As you can see, the ratios could be useful when considering whether to rent or buy. Investors also often look at the ratios before purchasing a rental property.

The number also may be used as an indicator of an impending housing bubble. A substantial increase in the ratio could mean that renting is becoming a much more attractive option in that specific housing market.

If you’re exploring different areas, it can also be a good idea to estimate mortgage payments based on median home prices. That way, you can determine if it’s a cost you can reasonably afford to add to your budget on a monthly basis.

Recommended: How to Apply for a Home Loan Online

Price-to-Rent Ratio by City

Here are 52 popular metropolitan areas and their price-to-rent ratios. As of the third quarter of 2022, the median home sale price in the U.S. was $454,900, the Federal Reserve Bank of St. Louis reported.

Median sale price listed comes from Redfin as of December 2022. Median rents listed come from the Zumper National Rent Report from November 2022, based on a one-bedroom apartment. Remember, as home prices and rents shift over time, so do the ratios.

1. San Francisco

It’s no secret that San Francisco housing prices are way up there. The median sale price was $1,352,500, and the median rent for a one-bedroom apartment was $3,000 per month (or $36,000 a year). That gives the hilly city a price-to-rent ratio of nearly 38.

2. San Jose, Calif.

Golden State housing continues its pricey reputation in San Jose. The median sale price here was $1,222,500, and the city had a median one-bedroom rent of $30,480 annually ($2,540 a month), leading to a price-to-rent ratio of 40.

3. Seattle

The Emerald City had a median sale price of $820,000. Meanwhile, the median annual rent for a one-bedroom was $23,160, for a price-to-rent ratio of around 35.

4. Los Angeles

A median sale price of $965,000 and a median one-bedroom rent of $29,160 a year ($2,430 a month) shines a Hollywood light on renting, with a rent-to-price ratio of 33.

5. Long Beach, Calif.

With a median home price of $765,000 and one-bedroom rent averaging $1,770 a month, Long Beach earned a ratio of 36.

6. Honolulu

The ratio in the capital of Hawaii is a steamy 25, with a $552,500 median sale price and a median rent of $21,600 per year.

7. Oakland, Calif.

Oakland, across the bay from San Francisco, had a median sale price of $870,000 and median rent of $26,760 a year ($2,230 a month). This earned the location a price-to-rent ratio of 32.

8. Austin, Texas

A hotbed for artists, musicians, and techies, Austin had a price-to-rent ratio of nearly 27. This was thanks to a median sale price of $540,000 and median annual rent of $20,160.

9. San Diego

Hop back to Southern California beaches and “America’s Finest City,” where a median sale price of $835,000 and median rent of $30,000 a year led to a ratio of almost 28.

10. New York, N.Y.

The median sale price here was $790,000 and median rent was $45,480 a year ($3,790 a month), which equates to a price-to-rent ratio of roughly 17.

Of course, the city is composed of five boroughs: the Bronx, Brooklyn, Manhattan, Queens, and Staten Island, and it’s probable that most of the sales under $790,000 were not in Manhattan (where the median sale price was $1.2 million) or Brooklyn (where the median was $950,000). Just looking at Manhattan using the same annual average rent figure, the ratio looks more like 26.

11. Boston

With a median sale price of $775,000 and median rent of $36,000 a year, Beantown had a price-to-rent ratio of over 21.

12. Portland, Ore.

The midpoint of buying here of late was $524,500, compared with median rent of $18,480 per year, for a price-to-rent ratio of 28.

13. Tucson, Ariz.

In Tucson, the median sale price of $329,950 and median annual rent of $11,280 came out to a ratio of 29.

14. Denver

The Mile High City logged a renter-leaning ratio of nearly 29, thanks to a median sale price of $575,000 and median annual rent cost of $20,040.

15. Colorado Springs, Colo.

With a median sale price of $420,000 and annual rent of $14,760, this city at the eastern foot of the Rocky Mountains had a recent price-to-rent ratio of 28.

16. Albuquerque, N.M.

In the Southwest, Albuquerque heated up to a ratio of 26, based on a median home sale price of $300,000 and annual rent of $11,400.

17. Washington, D.C.

The nation’s capital is another pushpin on the map with a high cost of living. The median sale price of $650,000 compares with median rent of $27,600 annually ($2,300 a month), translating to a ratio of nearly 24.

18. Mesa, Ariz.

With a median sale price of $430,000 and median annual rent of $16,320, Mesa has a price-to-rent ratio of 26.

19. Las Vegas

Sin City has reached a ratio of 25, based on a $385,000 median sale price vs. $15,600 in annual rent.

20. Phoenix

Phoenix’s price-to-rent ratio has revved up to 24, with a median home sale price of $408,000 and $16,680 in rent.

21. Raleigh, N.C.

North Carolina’s capital, the City of Oaks, logs a ratio of nearly 27. This is based on a $407,500 median home sale price and median annual rent of $15,240.

22. Tulsa, Okla.

Tulsa had a price-to-rent ratio of 19, with median annual rent of $10,680 and home sale prices at a median of $203,750.

23. Dallas

This sprawling city had a recent median sale price of $400,000 and median annual rent of $17,040, leading to a price-to-rent ratio of 23.

24. Sacramento, Calif.

This Northern California city had a recent median sale price of $450,000 and median annual rent of $18,720, for a price-to-rent ratio of 24.

25. Fresno, Calif.

Fresno makes the list with a price-to-rent ratio of 20, based on median home sale prices of $380,000 and median annual rent of $15,960.

26. Oklahoma City

The capital of Oklahoma had one of the lower price-to-rent ratios until recent home price spikes. It logs a ratio of 24 lately, based on a median sale price of $251,800 and median annual rent of $10,440.

27. Arlington, Texas

Back to the Lone Star State, this city between Fort Worth and Dallas has a price-to-rent ratio of 24. This is thanks to a median sales price of $320,000 and median annual rent of $13,200.

28. San Antonio

This Texas city southwest of Austin had a median sale price of $285,000 and median annual rent of $13,920, resulting in a price-to-rent ratio of 20.

29. El Paso, Texas

El Paso traded a low price-to-rent ratio for a higher one when home prices rose. It’s at a 23, based on recent figures of a median sale price of $235,000 and median rent at $10,200 a year.

30. Omaha, Neb.

With a median sale price of $255,000 and median annual rent of $10,920, Omaha has a recent home price-to-rent ratio of 23.

31. Nashville, Tenn.

The first Tennessee city on this list is the Music City, with a price-to-rent ratio of 21. Nashville has a median sale price of $440,000 and a median annual rent of $20,400 ($1,700 per month).

32. Virginia Beach, Va.

The ratio here has nearly reached 20, based on a median home sale price of $330,000 and median rent of $16,800 per year.

33. Tampa, Fla.

This major Sunshine State city has a price-to-rent ratio of almost 21, based on a median home sale price of $410,000 and median annual rent of $19,800.

34. Jacksonville, Fla.

This east coast Florida city had a recent ratio of 19, based on a median sale price of $289,000 and median rent of $15,000 per year.

35. Charlotte, N.C.

Charlotte’s price-to-rent ratio of 22 arises from a median home sale price of $391,900 and median annual rent of $17,760.

36. Fort Worth, Texas

Panther City’s price-to-rent ratio has crept up to 22, based on a median home sale price of $340,000 and median rent of $15,120 per year.

37. Houston

Houston, we have a number: it’s a price-rent-ratio of 19. That’s based on a median sale price of $305,000 and median annual rent of $16,080.

38. Louisville, Ky.

Kentucky’s largest city has a median home sale price of $224,950 and median annual rent of $12,720. That leaves Louisville with a price-to-rent ratio of almost 18.

39. Columbus, Ohio

The only Ohio city on this list has a price-to-rent ratio of 19, due to a median sale price of $249,900 and median annual rent of $12,840.

40. Atlanta

Heading South, Atlanta has a median sale price of $400,000 and median annual rent of $19,440, for a price-to-rent ratio of 20.

41. Miami

Those looking to put down roots in this vibrant city will find a price-to-rent ratio of just under 19, based on a median home sale price of $525,000 and median rent of $19,200 annually.

42. Minneapolis

The Mini-Apple is sweeter on renting, with a ratio of 21. This is based on a median sale price of $320,000 and median annual rent of $14,880.

43. New Orleans

Next up is another charming southern city. New Orleans has a price-to-rent ratio of nearly 18, given a median sale price of $325,000 and median rent of $18,240 per year.

44. Kansas City, Mo.

In this Show-Me State city, a median home value of $246,000 and median annual rent of $12,720 equate to a price-to-rent ratio of 19.

45. Chicago

Chi-Town’s 14 price-to-rent ratio is based on a $310,000 median home sale price and $22,440 median annual rent.

46. Memphis, Tenn.

Memphis logs a price-to-rent ratio of nearly 15, with a median home sale price of $179,500 and median annual rent of $12,240.

47. Indianapolis

The ratio in this capital city is 18, thanks to a median home sale price of $225,000 and median annual rent of $12,360.

48. Philadelphia

This major East Coast city had a recent median sale price of $250,750 and median annual rent of $17,640, for a price-to-rent ratio of 14.

49. Baltimore

Charm City had a recent median home sale price of $215,000 and median annual rent of $16,560, resulting in a price-to-rent ratio of 13.

50. Newark, N.J.

Newark, anyone? The median sale price here is $409,000, with median rent at $1,400 a month (or $16,800 a year), leading to a ratio of 24.

51. Milwaukee

Milwaukee is slightly more favorable to homebuyers than renters, thanks to a price-to-rent ratio of 15. This Midwest city had a recent median sale price of $180,000 and median annual rent of $11,640.

52. Detroit

Detroit saw a spike in home sale prices, though the latest median sale price was a relatively low $82,000, compared with median annual rent of $13,200. This resulted in a price-to-rent ratio of 6.

Recommended: Cost of Living Index by State

How to Calculate Price-to-Rent Ratio

If you don’t see your city on the list, rest assured that it’s possible to calculate price-to-rent ratio yourself. To do so, you’ll simply take the median home sale price in your area and divide it by median annual rent.

Here’s an example: Let’s say the median rent in a city is $3,000 a month, and the median sale price is $1 million. You’d divide $1 million by $36,000 ($3,000 per month multiplied by 12, the number of months in the year). The result is a price-to-rent ratio of nearly 28.

The Takeaway

The price-to-rent ratio lends insight into whether a city is more favorable to buyers or renters. Usually in a range of 1 to 21-plus, the ratio is useful to house hunters, renters, and investors who want to get the lay of the land.

---

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

SoFi Mortgages
Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility-criteria for more information.

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

SOHL0722010

Read more