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Renting Is Usually Cheaper Than Owning, But Not Always — Here’s How They Compare in the Nation’s 50 Largest Metros

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It may not have been reviewed, commissioned or otherwise endorsed by any of our network partners.

Finding a place to live can be challenging, and so can choosing between renting or buying a home. 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. On the other hand, buying a home can be a valuable investment that turns out to be cheaper in the long term.

Either way, cost is one of the biggest factors to consider when buying or renting.

To look at how the cost of renting a home differs from owning one, LendingTree analyzed U.S. Census Bureau data to compare monthly rental and housing payments for homes with and without mortgages in the 50 largest metros. We found that renting is cheaper than owning a home — at least until a person has paid off their mortgage.

Key findings

  • If you’re still paying off your 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 costs for homes with a mortgage is $564 a month. This is lower than in 2019, when renters paid an average of $593 less monthly than homeowners with mortgages. A combination of factors, including record-low interest rates that offset rising home prices, likely contribute to this smaller gap.
  • San Jose, Calif., New York and San Francisco are the metros where the spread in costs between renting and owning a home with a mortgage is widest. In these metros, median monthly gross rent is an average of $1,262 less than the median monthly housing costs for a home with a mortgage. Unlike across the 50 metros, this gap widened — from $1,221 in 2019 — across the same three metros at the top, though they were ordered differently.
  • Orlando, Fla., Phoenix and Jacksonville, Fla., are the metros where the gap between renting and owning a home with a mortgage is the narrowest. In these metros, the median gross rent costs are an average of $252 less than the median monthly housing costs for homes with a mortgage. Orlando had the narrowest gap in 2019, too.
  • San Jose, San Francisco and San Diego are the metros where the spread in costs between renting and owning a home without a mortgage (i.e., homes purchased with cash or homes with paid-off mortgages) is the widest. Across these three metros, the median gross rent is an average of $1,310 more each month than the median monthly housing costs for homes without a mortgage. That figure is mostly unchanged from $1,307 in 2019, when the three metros finished in the same order.
  • Milwaukee, Cleveland and Buffalo, N.Y., are the metros where the gap between renting and owning a home without a mortgage is the narrowest. In these metros, the median gross rent is an average of $319 more each month than the median cost of owning a home without a mortgage.

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

No. 1: San Jose, Calif.

  • Median monthly gross rent: $2,454
  • Median monthly housing costs for homes with a mortgage: $3,760
  • Difference: $1,306

No. 2: New York

  • Median monthly gross rent: $1,600
  • Median monthly housing costs for homes with a mortgage: $2,850
  • Difference: $1,250

No. 3: San Francisco

  • Median monthly gross rent: $2,156
  • Median monthly housing costs for homes with a mortgage: $3,385
  • Difference: $1,229

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: $1,420
  • Median monthly housing costs for homes with a mortgage: $1,652
  • Difference: $232

No. 2: Phoenix

  • Median monthly gross rent: $1,384
  • Median monthly housing costs for homes with a mortgage: $1,630
  • Difference: $246

No. 3: Jacksonville, Fla.

  • Median monthly gross rent: $1,238
  • Median monthly housing costs for homes with a mortgage: $1,516
  • Difference: $278

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: $2,454
  • Median monthly housing costs for homes without a mortgage: $963
  • Difference: $1,491

No. 2: San Francisco

  • Median monthly gross rent: $2,156
  • Median monthly housing costs for homes without a mortgage: $876
  • Difference: $1,280

No. 3: San Diego

  • Median monthly gross rent: $1,908
  • Median monthly housing costs for homes without a mortgage: $748
  • Difference: $1,160

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

No. 1: Milwaukee

  • Median monthly gross rent: $977
  • Median monthly housing costs for homes without a mortgage: $670
  • Difference: $307

No. 2: Cleveland

  • Median monthly gross rent: $887
  • Median monthly housing costs for homes without a mortgage: $567
  • Difference: $320

No. 3: Buffalo, N.Y.

  • Median monthly gross rent: $888
  • Median monthly housing costs for homes without a mortgage: $557
  • Difference: $331

Is it better to rent or 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.

Consider renting if:

  • You can’t afford a loan at today’s rates. Mortgage rates have increased significantly since 2020 and 2021, making paying off a mortgage considerably more expensive. Because rent payments tend to be cheaper than mortgage payments, renting can be a good option for those who would struggle to keep up with a mortgage at today’s rates.
  • You don’t have enough cash for a down payment. Even if you could hypothetically afford your payments each much, you may struggle to get a mortgage if you don’t have the money for a down payment. The upfront costs associated with renting — like a security deposit or a broker’s fee — are likely to be much more affordable than a down payment on a house.
  • 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. If you don’t plan to stay in an area long term or 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 responsibility of covering maintenance and repairs, renting will put that responsibility on your landlord’s shoulders.

Consider buying if:

  • 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 tap this equity with a home equity loan to make value-adding home improvements or achieve another financial goal.
  • You think you could benefit from taking advantage of certain tax benefits. Homeowners can qualify for tax deductions to 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 want more freedom over your space. When you rent, you’re ultimately beholden to a landlord’s rules. This might mean you can’t remodel, paint or do basic maintenance without someone else’s approval. As a homeowner, on the other hand, you’ll be allowed to modify your home however you see fit, so long as you aren’t breaking any laws or violating homeowners association (HOA) rules.
  • You’re financially secure. While there are a lot of perks that can come with being a homeowner, they’re unlikely to matter much to someone struggling with their finances and facing default on their mortgage. As a result, you should only consider buying a home if you’re reasonably sure you can afford it.

Methodology

LendingTree analyzed data from the U.S. Census Bureau 2021 and 2019 American Community Surveys with one-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 or without a mortgage — include the total monthly cost that renters or owners incur, including utilities, fees and/or taxes.

 

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