Americans’ homeownership rate is 64.8%, according to the latest U.S. Census data. Home ownership is a big part of the American dream. With it comes with a sense of accomplishment, security and pride.
It also comes with responsibility for maintaining the home, paying property taxes, carrying insurance, paying utilities and keeping up with community commitments such as paying association fees. These costs add up quickly, so it’s important to weigh the advantages and disadvantages before you buy.
LendingTree, the online loan marketplace, recently compared rents with mortgage payments in the 50 largest U.S. metros, finding that, in 30 of the 50 metros, renting is cheaper than purchasing a home.
Following are the 13 metros where renting is cheaper by more than $150 a month, beginning with cities with a smaller advantage for renters.
Median monthly rent: $1,325
Median monthly mortgage payment: $1,483
Renting saves: $158
Renting costs less, on average, than owning in Baltimore. But don’t give up on buying a home if you live here. Three of Baltimore’s neighborhoods made Redfin’s newest list of the 10 hottest affordable neighborhoods in the U.S. “Affordable,” in this case, means their median price tag is under $294,000.
12. Sacramento, California
Median monthly rent: $1,342
Median monthly mortgage payment: $1,517
Renting saves: $175
Renting is a clear winner in Sacramento. And yet, there’s room to grow if you’re interested in homeownership. The city is among Indeed.com’s 2018 top 10 best markets for job seekers.
Secure a good job and rent for a few years so you can save for that down payment.
Median monthly rent: $945
Median monthly mortgage payment: $1,123
Renting saves: $178
Low rent helps make living in Detroit affordable. The cost of living in Detroit is 3% below the national average.
Median monthly rent: $1,180
Median monthly mortgage payment: $1,362
Renting saves: $182
Chicago has recently seen a surge in home construction and home maintenance spending — the most of any of the largest 10 U.S. metros.
The Chicago Tribune reports a 60.2% increase in new construction and growth of nearly 20% in spending on maintenance.
9. Raleigh, North Carolina
Median monthly rent: $1,200
Median monthly mortgage payment: $1,383
Renting saves: $183
Although renting remains cheaper on a monthly basis, the Raleigh-Durham region is one of the top 10 areas for a real-estate investment, according to the annual Emerging Trends in Real Estate report, published by PricewaterhouseCoopers and the Urban Land Institute.
Median monthly rent: $1,159
Median monthly mortgage payment: $1,367
Renting saves: $207
Philadelphia’s rental market is booming, at least among baby boomers. Philly saw 36% growth in rentals among residents 55 and older between 2008 and 2017. That’s compared to an 8% rise among renters younger than 55.
At least one reason is plain: Renting offers older residents a maintenance-free lifestyle, making it easier to enjoy all Philly has to offer.
7. Providence, Rhode Island
Median monthly rent: $1,016
Median monthly mortgage payment: $1,242
Renting saves: $226
You can spend the money you save by renting in Providence on the city’s legendary restaurant scene. Two of the city’s chefs were among 2019’s James Beard Award semifinalists.
6. New York City
Median monthly rent: $1,489
Median monthly mortgage payment: $1,738
Renting saves: $249
When home sales in the Big Apple slowed way down in the fourth quarter of 2018, rental prices dropped too, writes Forbes contributor Frederick Peters. He is CEO of Warburg Realty, which serves Manhattan’s Tribeca and Upper East Side neighborhoods. Peters writes:
“Apartments continue to rent at lower prices than they did three years ago and spend much longer on the market.”
5. San Francisco
Median monthly rent: $1,856
Median monthly mortgage payment: $2,130
Renting saves: $275
You may not be able to afford to buy a home in San Francisco, but the high rents here might be worth it if you get a great job.
Indeed.com’s latest Best Cities for Job Seekers report named the city one of the best metropolitan areas for job seekers. Salary, labor market, work-life balance and job security and potential for advancement were among factors considered.
Median monthly rent: $1,417
Median monthly mortgage payment: $1,700
Renting saves: $284
Like San Francisco, Boston ranks high on Indeed.com’s Best Cities for Job Seekers report.
Here’s more good news for Boston renters: Some Massachusetts lawmakers are supporting a rent control bill, which is meant to limit the amount of rent increases by property owners by linking it to the local consumer price index.
3. Oklahoma City
Median monthly rent: $900
Median monthly mortgage payment: $1,200
Renting saves: $300
In March, Apartment List reported that Oklahoma City was one of several U.S. metros seeing a surge of high-income renters, those earning at least $100,000 a year.
Yahoo Finance interviewed Igor Popov, chief economist for Apartment List, who explained:
“We found that these are the places that have seen enormous growth… mid-sized cities with strong growing economies where the rental landscape has really changed dramatically over the last 10 years.”
Median monthly rent: $925
Median monthly mortgage payment: $1,225
Renting saves you: $301
Milwaukee’s $301 gap between renting and buying landed it the No. 2 spot on LendingTree’s list.
1. Louisville, Kentucky
Median monthly rent: $866
Median monthly mortgage payment: $1,195
Renting saves: $329
In Louisville, the median home price is $180,100, which earned the city No. 6 on a list of least expensive housing markets.
However, renting is an even better deal. Renters enjoy a median savings of $329 a month over those with a mortgage.
Plus, that extra money goes further in Louisville, where the metro area’s cost of living is 8% lower than the national average.
So, whether you’re looking for a temporary home or you’re ready to put down roots, you should like the costs in this Kentucky Derby town.
Do you rent or own your home? What factors influenced your decision? Tell us in the comments below or at our Facebook page.