Buying a Home is Cheaper Than Renting in Seattle

February 5, 2020
Last updated:
March 25, 2022
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Does getting a mortgage in Seattle, WA sound like it’s way out of your financial reach? The truth is, renting can be even more expensive than paying a mortgage. 

Seattle is known to be one of the most expensive housing markets in the country. Prices have increased rapidly in the city over the past few years and are over the $932,000 mark.

But is it still worth it to rent instead of buying? Even though home prices are on the higher end of the spectrum relative to the rest of the state and country, are rent prices any cheaper than mortgage payments?

Many people rent in Seattle as a result, thinking that it may be the cheaper route compared to getting and paying a mortgage. But the truth is, buying a home in Seattle may actually be cheaper than paying rent in the city. While home prices may be high, rents are very expensive, too. In fact, many residents find it difficult to secure certain rental units because they simply cannot afford the monthly rent payments.

As of this writing, the average home price in Seattle is $932,382, according to real estate research firm Zillow. The median rent price in the city is as follows:

  • 1-bedroom unit: $2,325
  • 2-bedroom unit: $3,437
  • 3-bedroom unit: $3,927

Of course, there are many homes and rental units that are cheaper than these averages that you may be able to find. But on average, these are the types of prices you’ll see in Seattle.

So, is the statement “Buying a home is cheaper than renting in Seattle” true?

Buying a Home Could Be Cheaper Than Renting in Seattle

According to a recent report, buying a home is cheaper than renting in the biggest metropolitan areas in the country, including Seattle. Over the past few months, home prices have soared in Seattle by 14.6% over the past 12 months.

Buying may be cheaper than renting in Seattle over the long run. If you are planning to stick around in one place for a few years, you may be better off buying instead of renting. This calculator takes a number of factors into account to determine the cost comparisons and looks at a lot more than just rent checks or mortgage payments.

The cost of renting includes the monthly rent, renter’s insurance, and a refundable security deposit. The cost of buying is calculated using a number of factors, including:

  • Purchase price (along with the initial down payment)
  • Closing costs
  • Mortgage payments
  • Recurring costs like property taxes, maintenance, and insurance
  • Tax deductions

Of course, the overall cost will depend on other factors as well, such as the mortgage rate, the length of time you stay in the home, and price appreciation in the area. Considering the low-interest rate environment we are currently in, buying a home is even more affordable today than it was in years past, despite the high home prices in Seattle.

As of March 2022, the rate for a 30-year fixed-rate mortgage is 4.42%.

After a few years, the cost of renting can actually be higher than the cost of buying. You would be spending less in homeownership compared to renting if you rented at an average $3,927 per month for a 3-bedroom unit as opposed to buying a $932,382 home with a 20% down payment

Based on the figures above, you would have a mortgage of $745,906 and monthly payments of $3,726. And based on today’s rates, you would be paying more in rent for a 3-bedroom home compared to mortgage payments every month. 

The biggest difference is that with mortgage payments, all that money is going towards your home equity and paying off your home loan. On the other hand, all that money you spend paying rent is going towards paying off your landlord’s mortgage, leaving you with no asset at the end of the day.

Today’s Seattle Mortgage Rates

Benefits of Buying Vs Renting in Seattle

In addition to the potential savings of buying versus renting in Seattle, there are other benefits to buying that you may want to consider.

Invest For Your Future Wealth

The long-term investment that you can grow over time is well worth the leap into homeownership. When you rent, you’re essentially paying someone else’s mortgage for them while doing nothing to develop your own wealth. Instead, when you buy and own your own home in Seattle, you are building your own equity and ultimately boosting the value of your personal assets.

Between your mortgage payments, upgrades you make on your home, and appreciation over time, your home will increase in value and therefore help you increase your equity and wealth.

More Flexibility

When you rent, you’re living in someone else’s home. That means you don’t have the freedom to do certain things to the home that you would if you were the owner. Renting means you’ll need to get permission from the owner to make certain changes to the place. Even if you want to hammer a hole into the wall to hang a TV mount, for example, you may need permission. And much larger projects will likely not even be allowed at all.

But when you own, you’re free to do with your home what you please, as long as you follow local by-laws and obtain the necessary building permits (depending on the scope of the upgrades). This flexibility is a big reason why many people choose to make the transition from “renter” to “owner.”

Tax Benefits

There are certain tax deductions that can be made when you own a home. For instance, you may deduct mortgage interest up to $750,000. On a state and local level, you may deduct up to $10,000 in property, sales, and income tax. Interest paid on home equity loans may also be tax-deductible in certain situations where the funds are used to improve a home, such as a kitchen renovation or new addition. This can translate into a lot of savings that you wouldn’t be able to take advantage of if you rented instead of owned.

More Security

Renting typically involves signing a lease, which will likely stipulate how long your lease is good up to. For instance, 12-month leases are typical. During this 12-month period, both you and your landlord are bound by the terms of the contract. But once that 12 months is up, your landlord is free to ask you to vacate the premises, as long as adequate notice is provided.

Whether the landlord is looking to move into the place themselves or wants to sell the property, they may have various reasons for not wanting to renew your lease. In this case, you’ll need to find another place.

When you own, you have a lot more security. There is no landlord that will ask you to vacate your home because your lease is up. Unless you are unable to continue making your mortgage payments on time, you’re free to live in your home as long as you please until you’re ready to move out on your own accord.

If you can afford to buy a home in Seattle, you’ll have many housing opportunities to take advantage of. You’ll also be able to plant some roots, be part of a community, and start taking advantage of all the benefits that homeownership has to offer.

Get an Instant Mortgage Rate Quote Today

Ready to Apply For a Mortgage in Seattle?

If you are ready to apply for a mortgage in Seattle to finance a home purchase, Sammamish Mortgage can help. We have been serving buyers across the Pacific Northwest since 1992. We serve all of Washington, Oregon, Idaho, and Colorado and offer many mortgage programs. Get in touch with Sammamish Mortgage today to get started.

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