Could You Afford a Home in Missoula with the Average Cost of Rent?
A recent study pointed out something interesting about the difference between the cost of rent and the cost of a mortgage in American cities.
Here's the premise from point2homes.com:
"If renters paid a mortgage equal to their current rent, how much house could they buy?"
In the study, they looked at some of America's largest cities and found that "In 63 large urban hubs...a rent-to-mortgage swap would translate to (much) less than 1,000 square feet."
Given how challenging the Missoula housing market has been since the pandemic, I was curious if the same were true here. So, I did my best to recreate the study using data about Missoula, Montana.
I used the same assumptions that they did: 20% down payment and an assumption that nothing else about a person's budget would change.
Here's What it Would Look like in Missoula
All of these are estimates, but it may give you some idea of the size house you could buy for the rent paid in Missoula.
Missoula Average Rent
Zumper.com lists Missoula's average rent for a 2-bedroom apartment as $1,595, so we'll use that as the mortgage payment.
Comparable Missoula Mortgage
Zillow's Mortgage Calculator shows that with a 20% down payment and a 30-year fixed loan, a home that costs $253,000 would give you a mortgage payment of $1,593.
What You Can Buy in Missoula for $253,000
I searched current real estate available in Missoula according to Zillow and used the following parameters: list price up to $253,000, at least 2 bedrooms, and the home types included house, condos, and manufactured. There were 32 results.
- 26 Manufactured houses
- 1 Condo
- 5 Houses
Taking the average square feet of the 32 results, with a mortgage payment that's roughly the same as Missoula's average rent, you could buy a property that's 1,123 square feet, which is more than the threshold of the original study, and maybe more than some apartments in Missoula.