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LendingTree Compares Renting and Owning a Home in the 50 Largest Metropolitan Areas in the U.S.

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Finding a place to live can be challenging, and so can choosing between renting or buying a home. Renting might be the best option for someone who doesn’t plan on staying in one area long term or is having trouble saving for a down payment. On the other hand, buying a home can be a valuable long-term investment.

In either case, cost is one of the biggest factors that people consider when choosing between buying and renting.

To take a closer look at how the cost of renting a home differs from what it costs to own one, LendingTree compared monthly rental and housing payments for homes with and without mortgages in the 50 largest metropolitan areas in the United States.

In doing so, LendingTree found that renting is usually cheaper than owning a home — until a person has paid off their mortgage.

Key findings

  • If you’re still paying off your mortgage, renting is cheaper than owning in each of the nation’s 50 largest metros. On average, renting is $606 cheaper than owning across the nation’s largest metros.
  • New York, San Francisco and San Jose, Calif., are the metros where the spread in costs between renting and owning a home with a mortgage is the widest. In these three metros, it’s about $1,200 cheaper, on average, to rent versus to own a home while paying off a mortgage.
  • Orlando, Fla., Tampa, Fla., and Indianapolis are the metros where the gap between renting and owning a home with a mortgage is the narrowest. In these metros, renters can save an average of $335 a month.
  • San Jose, Calif., San Francisco and San Diego are the metros where the spread in costs between renting and owning a home without a mortgage (that is, a home whose mortgage is paid in full) is the widest. Owners in these three areas can save an average of $1,223 in monthly housing costs.
  • Providence, R.I., Hartford, Conn., and Milwaukee are the metros where the gap between renting and owning a home without a mortgage is the narrowest. In these metros, owners who have paid off their mortgage can save an average of $260 a month. 

Metros where the spread in costs between renting and owning a home with a mortgage is the widest

No. 1: New York

  • Median monthly gross rent: $1,439
  • Median monthly housing costs for homes with a mortgage: $2,802
  • Difference between median monthly gross rent and median monthly housing costs for homes with a mortgage: -$1,363

No. 2: San Francisco

  • Median monthly gross rent: $1,905
  • Median monthly housing costs for homes with a mortgage: $3,088
  • Difference between median monthly gross rent and median monthly housing costs for homes with a mortgage: -$1,183

No. 3: San Jose, Calif.

  • Median monthly gross rent: $2,249
  • Median monthly housing costs for homes with a mortgage: $3,347
  • Difference between median monthly gross rent and median monthly housing costs for homes with a mortgage: -$1,098

Metros where the spread in costs between renting and owning a home with a mortgage is the narrowest

No. 1: Orlando, Fla.

  • Median monthly gross rent: $1,210
  • Median monthly housing costs for homes with a mortgage: $1,508
  • Difference between median monthly gross rent and median monthly housing costs for homes with a mortgage: -$298

No. 2: Tampa, Fla.

  • Median monthly gross rent: $1,115
  • Median monthly housing costs for homes with a mortgage: $1,458
  • Difference between median monthly gross rent and median monthly housing costs for homes with a mortgage: -$343

No. 3: Indianapolis

  • Median monthly gross rent: $916
  • Median monthly housing costs for homes with a mortgage: $1,280
  • Difference between median monthly gross rent and median monthly housing costs for homes with a mortgage: -$364

Metros where the spread in costs between renting and owning a home without a mortgage is the widest

No. 1: San Jose, Calif.

  • Median monthly gross rent: $2,249
  • Median monthly housing costs for homes without a mortgage: $792
  • Difference between median monthly gross rent and median monthly housing costs for homes without a mortgage: $1,457

No. 2: San Francisco

  • Median monthly gross rent: $1,905
  • Median monthly housing costs for homes without a mortgage: $729
  • Difference between median monthly gross rent and median monthly housing costs for homes without a mortgage: $1,176

No. 3: San Diego

  • Median monthly gross rent: $1,658
  • Median monthly housing costs for homes without a mortgage: $621
  • Difference between median monthly gross rent and median monthly housing costs for homes without a mortgage: $1,037

Metros where the spread in costs between renting and owning a home without a mortgage is the narrowest

No.1: Providence, R.I.

  • Median monthly gross rent: $968
  • Median monthly housing costs for homes without a mortgage: $719
  • Difference between median monthly gross rent and median monthly housing costs for homes without a mortgage: $249

No. 2: Hartford, Conn.

  • Median monthly gross rent: $1,116
  • Median monthly housing costs for homes without a mortgage: $851
  • Difference between median monthly gross rent and median monthly housing costs for homes without a mortgage: $265

No. 3: Milwaukee

  • Median monthly gross rent: $903
  • Median monthly housing costs for homes without a mortgage: $637
  • Difference between median monthly gross rent and median monthly housing costs for homes without a mortgage: $266

Is it better to rent or to own?

If you’re struggling with the decision to buy or rent a home, keep in mind that there’s no right or wrong answer. Carefully consider your budget, lifestyle and financial goals to help you choose your best option.

Below are some considerations to help you decide whether to rent or buy a home.

Consider renting if:

  • You don’t have enough cash for a down payment. Most homebuyers need to get a loan to purchase a home. However, most mortgage programs require a cash down payment. Depending on your budget and savings, you may not have enough money for a down payment and find that it’s more feasible to rent than buy.
  • You’re not planning on living in the home for very long. Buying a home is typically a long-term investment. And depending on the market, selling a home can take months or even years. If you don’t plan on staying in an area long term or simply want the freedom to pick up and move for a new job or a change of pace, you may be better off renting.
  • You don’t want the hassle and expense of maintaining a home. Buying a home involves more than the mortgage payment. If you don’t want to be saddled with the financial responsibility of covering maintenance and repair costs, renting will put that responsibility on your landlord’s shoulders.

Consider buying if:

  • You’re financially secure. If you have a stable employment history, steady income and are able to put money into savings each month, you’re more likely to repay your mortgage. However, if you struggle with saving money or have an unpredictable income, buying a home may be riskier.
  • You want an investment for the future. Although buying a home can be expensive, it can also be a good investment in the long run. The longer you stay in your home, the more equity you’re likely to build over time as your mortgage balance shrinks and home values appreciate. You can even tap this equity with a home equity loan to make value-adding home improvements or achieve another financial goal.
  • You’ll reap certain tax benefits. Homeowners can qualify for tax deductions that can help lower their federal tax bill. For example, you can deduct the interest paid on up to $750,000 of mortgage debt if you’re an individual taxpayer or a married couple filing a joint tax return ($375,000 for a married couple filing separately). Other potential tax breaks include deductions for mortgage points, property taxes and having a home office.
  • You’re willing to shop around for the best loan offer before buying. Homebuyers who shop around for a mortgage can save tens of thousands of dollars over the life of their loan, and lower their mortgage payments.

Methodology

LendingTree used data from the U.S. Census Bureau’s 2019 American Community Survey with five-year estimates to determine the median costs to own and rent a home in the nation’s 50 largest metropolitan statistical areas (MSAs).

The housing cost variables used in this study — “median monthly gross rent” and “median monthly housing costs with/without a mortgage” — include the total monthly cost that renters or owners incur, including utilities, fees and/or taxes.

LendingTree subtracted the median monthly housing costs in each metro, for both those who have a mortgage and those who own their home outright (without a mortgage), by the median monthly gross rent in each metro to create the two rankings featured in this study.

LendingTree senior research analyst Jacob Channel contributed to this report.

 

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