Approximately 8% of homebuyers who use Zillow also view rental listings, as the monthly cost of owning a home continues to outpace renting in most U.S. markets, according to new analysis.
Roughly 8% of homebuyers who use Zillow also view rental properties, according to new analysis from the company. This shows that a growing proportion of consumers are blurring the line between renting and buying due to affordability pressures.
Zillow dubbed these consumers “dual shoppers” and found that they tend to look for similar types of homes in both markets, most often three-bedroom properties, suggesting that their lifestyle preferences are consistent even when accounting for different economic paths.
When dual buyers consider a home, it typically costs $415 more per month to own than to rent, but that difference includes mortgage payments after a 20% down payment, property taxes, insurance and maintenance, Zillow said. In high-cost markets like San Jose, the monthly difference can be more than $3,400.
“In today’s market, affordability is fundamentally changing the way people approach their home search,” said Kara Ng, senior economist at Zillow. “More shoppers are considering renting and buying at the same time, especially as monthly ownership costs continue to exceed rent in many markets.”
Coastal market leads
Dual shopping is most common in markets where affordability constraints create the greatest disparity between ownership and leasing. Los Angeles leads the nation with 12% of sales shoppers also looking at rentals, followed by San Diego at 10.8% and San Francisco at 10.1%.
In each of these cities, the median household needs to spend about two-thirds of their income on monthly mortgage payments with a 20% down payment, Giroux said. If you rent, that burden will be reduced to about one-third of your income.
New York City stands out as a major outlier. According to data from StreetEasy, 29.9 percent of New York City homebuyers are also considering renting. This is 3.8 times the national share. Zillow attributes this number to the city’s high rate of renters, about 70%, and rising home prices.
At the other end of the spectrum, in more affordable markets, double shopping is the least common. Hartford, Connecticut had the lowest share at 4.2%.
What Dual Shoppers Want
Two shoppers typically explore larger homes when viewing properties for sale. The rental properties they consider are, on average, 284 square feet smaller. Still, Zillow said, based on Zestimate comparisons, these rental properties often have a higher value per square foot, suggesting they may have newer finishes or more efficient layouts.
Zillow says that by listing both sales and rental products on one platform, it is able to understand consumer behavior that was previously not possible.
“Before, you were either a buyer or a renter, and the two paths rarely met,” Ng said. “But at Zillow, these aisles are right next to each other, and we see shoppers moving between for-sale and rental properties in the same area, considering which option is better for their lives.”
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