Renting is the less-expensive option for most Americans. Location is likely to be a determining factor when deciding whether to sign a lease or a mortgage.
That’s because cost is one of the biggest considerations, and that varies among cities. So the researchers at LendingTree [1], using U.S. Census data, compared the price of renting versus buying [1] in 50 major metropolitan areas.
Taking what the team found into consideration, analyst Jacob Channel offers suggestions about spotting a potential homebuyer versus someone for whom renting might be the better option.
For any homeowner still paying off a mortgage, renting is likely cheaper than owning in each of the nation’s 50 largest metros.
On average, the difference between median gross rent and median housing-related costs for homes with a mortgage is $564 a month.
Channel notes that this is lower nationwide than in 2019, when renters paid some $593 less monthly.
“A combination of factors, including record-low interest rates that offset rising home prices, likely contribute to this smaller gap,” he notes.
In San Jose, Calif., New York and San Francisco, median monthly rent is about $1,262 less than the median monthly costs for a homeowner.
That is the widest cost gap the researchers found, and unlike most of the cities examined, the gap in those areas has widened since 2019, when the difference was $1,221.
The narrowest expense gap was found in Orlando, Florida; Phoenix; and Jacksonville, Florida. In those cities it is still about $262 per month less to rent than to own, all housing costs considered, on average.
In a circumstance where the homebuyer does not have a current mortgage—say they have paid off the home, paid cash for the home or are not a previous homeowner—San Jose, San Francisco and San Diego show the widest gap, and Milwaukee, Cleveland and Buffalo show the narrowest.
The article on LendingTree.com [1] breaks down the full ranking. The LendingTree author points out that renting might be the better option for someone who doesn’t plan on staying in one area for a long time or is looking for short-term savings.
He adds, “On the other hand, buying a home can be a valuable investment that turns out to be cheaper in the long term.”