Is it Cheaper to Buy or Rent?
Home price growth, along with high mortgage rates, over the last several years has caused many would-be buyers to rent. But in some cities, owning a home is the more affordable option. To figure out the metros where monthly mortgage payments are lower than rent, the National Association of Realtors analyzed U.S. Department of Housing and Urban Development (HUD) data from the top 215 largest metro areas and found that 119 (about 55%) had median mortgage payments that were lower than typical rents.
Where Is it Cheaper to Buy a Home?
The report shows that the metros where mortgage payments are cheaper than monthly rents are predominantly located in the Midwest and South. Elmira, N.Y., offers the best deal for homebuyers with a median mortgage payment that is $747 cheaper than monthly rent. Likewise in Cleveland, where the median mortgage payment is $648 cheaper than renting, and in Decatur, Ill., with monthly mortgage payments that are $617 lower than rent.
Where Is it Cheaper to Rent a Home?
On the other hand, in 45% of the markets surveyed, renting tends to be the more affordable option in coastal cities. In San Jose, median monthly rents are $6,537 cheaper than monthly mortgage payments. In San Francisco, the difference between monthly rents and monthly mortgage payments is $2,826, and in Honolulu, the difference is $2,310 in favor of renting.
However, affordability isn’t the only reason people choose to rent
- More Baby Boomers Make the Switch to Renting: Baby Boomers make up a large share of homeowners, but many are making the switch to renting for the low maintenance lifestyle.
- 8 Amenities That Appeal to Renters in Build-to-Rent Communities: Many renters opt for build-to-rent communities for their private outdoor space, quick maintenance services, and communal clubhouses, among other onsite amenities.