Sunday, October 29, 2023

Renting May be Less Expensive

According to the latest data from Redfin, a real estate company, there are only four major U.S. metro areas where it is cheaper to buy a home than to rent1. These are:

  • Detroit, MI
  • Philadelphia, PA
  • Cleveland, OH
  • Houston, TX

In these cities, the typical home has an estimated monthly mortgage cost lower than its estimated monthly rental cost. For example, in Detroit, the median estimated monthly mortgage payment for homebuyers is $1,296, compared with a median estimated monthly rent of $1,6971.

On the other hand, there are many cities where renting is much more affordable than buying a home. The top 10 metros where renting is cheaper than buying are2:

  • Austin-Round Rock-Georgetown, TX
  • San Francisco-Oakland-Berkeley, CA
  • Los Angeles-Long Beach-Anaheim, CA
  • New York-Newark-Jersey City, NY-NJ-PA
  • Boston-Cambridge-Newton, MA-NH
  • Seattle-Tacoma-Bellevue, WA
  • San Diego-Chula Vista-Carlsbad, CA
  • Washington-Arlington-Alexandria, DC-VA-MD-WV
  • Denver-Aurora-Lakewood, CO
  • Portland-Vancouver-Hillsboro, OR-WA

In these cities, the monthly payments for starter homes are much higher than rents. For instance, in Austin, renting costs $2,013 less per month than buying, with renting 121% cheaper than buying3.

The main factors that affect the costs and benefits of renting and buying a home are the home prices, the mortgage rates, the property taxes, the maintenance costs, the rent prices, and the length of stay. Depending on your situation and preferences, you may find renting or buying more suitable for your needs. You can use online calculators or consult with real estate agents to compare the costs and benefits of renting and buying a home in different U.S. cities.