15 U.S. Cities Where It’s Cheaper to Buy Than Rent

House for Rent
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Editor's Note: This story originally appeared on Stessa.

When the COVID-19 pandemic hit America and sent people fleeing from small apartments in the biggest cities, it immediately propelled rent and home prices in opposite directions.

However, despite quickly escalating home prices, there are still many places across the country where the typical monthly mortgage payment is on par or below market rent, offering opportunities for both prospective homebuyers and real estate investors.

There is plenty of evidence to confirm that homes are indeed getting more expensive, especially in relation to rental units. Just before the start of 2020, home and rent prices were growing at the same rate: 3.7% year-over-year, according to the Federal Reserve’s tracking of the urban rent and home price indexes.

Within months, however, rental costs experienced an uncharacteristic cooling off that slowed growth to less than 2% annually by April 2021. Meanwhile, the effects of the pandemic nearly quadrupled the growth rate of home prices, catapulting it to 14.6% by April 2021.

To find the metropolitan areas where it’s cheaper to buy than rent, our team of researchers analyzed data from Zillow, the U.S. Department of Housing and Urban Development, and the U.S. Census Bureau.

They calculated the percentage difference between owner payments for a median-priced home and median rent estimates. Owner payments include the mortgage and associated property taxes based on a current 30-year fixed mortgage with a 20% down payment.

The result is that homeowners could save as much as 35% in large metros monthly or even more in smaller locations, potentially pocketing hundreds of dollars each month.

Here are the large metro areas (populations of 1 million or more) where it’s cheaper to buy than rent.

15. Indianapolis, IN

Indianapolis, Indiana cityscape
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Difference between monthly owner & renter payments: -14.5%
Median monthly mortgage & property taxes: $888
Median monthly rent: $1,038
Median home price: $216,944

14. Jacksonville, FL

Jacksonville, Florida
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Difference between monthly owner & renter payments: -14.7%
Median monthly mortgage & property taxes: $1,127
Median monthly rent: $1,321
Median home price: $271,909

13. Atlanta, GA

Atlanta cityscape
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Difference between monthly owner & renter payments: -15.3%
Median monthly mortgage & property taxes: $1,181
Median monthly rent: $1,394
Median home price: $286,047

12. Miami-Fort Lauderdale, FL

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Difference between monthly owner & renter payments: -15.5%
Median monthly mortgage & property taxes: $1,433
Median monthly rent: $1,695
Median home price: $344,370

11. Louisville-Jefferson County, KY

Louisville Kentucky
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Difference between monthly owner & renter payments: -16.9%
Median monthly mortgage & property taxes: $850
Median monthly rent: $1,023
Median home price: $207,950

10. Detroit, MI

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Difference between monthly owner & renter payments: -17.2%
Median monthly mortgage & property taxes: $961
Median monthly rent: $1,161
Median home price: $212,925

9. Richmond, VA

Richmond, Virginia
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Difference between monthly owner & renter payments: -17.6%
Median monthly mortgage & property taxes: $1,137
Median monthly rent: $1,379
Median home price: $283,730

8. Virginia Beach, VA

Virginia Beach, Virginia
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Difference between monthly owner & renter payments: -19.4%
Median monthly mortgage & property taxes: $1,132
Median monthly rent: $1,405
Median home price: $278,282

7. Tampa, FL

Tampa, Florida
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Difference between monthly owner & renter payments: -20.6%
Median monthly mortgage & property taxes: $1,148
Median monthly rent: $1,446
Median home price: $276,685

6. New Orleans, LA

New Orleans
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Difference between monthly owner & renter payments: -21.4%
Median monthly mortgage & property taxes: $925
Median monthly rent: $1,177
Median home price: $233,885

5. Orlando, FL

Orlando skyline
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Difference between monthly owner & renter payments: -23.7%
Median monthly mortgage & property taxes: $1,191
Median monthly rent: $1,562
Median home price: $290,447

4. Memphis, TN

Memphis, Tennessee
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Difference between monthly owner & renter payments: -27.6%
Median monthly mortgage & property taxes: $779
Median monthly rent: $1,076
Median home price: $185,176

3. Tulsa, OK

Tulsa Oklahoma
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Difference between monthly owner & renter payments: -28.0%
Median monthly mortgage & property taxes: $716
Median monthly rent: $995
Median home price: $171,584

2. Oklahoma City, OK

Oklahoma City, Oklahoma traffic highways
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Difference between monthly owner & renter payments: -28.6%
Median monthly mortgage & property taxes: $750
Median monthly rent: $1,051
Median home price: $179,507

1. Birmingham, AL

Birmingham, Alabama
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Difference between monthly owner & renter payments: -35.8%
Median monthly mortgage & property taxes: $752
Median monthly rent: $1,172
Median home price: $198,513

Methodology

Working on computer data analysis on a laptop
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The data used in this analysis is from Zillow’s housing data, the U.S. Department of Housing and Urban Development’s 50% Rent Estimates, and the U.S. Census Bureau’s American Community Survey (ACS).

To determine the locations where it is cheaper to buy than rent, researchers calculated the difference between owner payments for a median-priced home and median rent estimates.

Owner payments only include the estimated mortgage and property taxes; they do not include maintenance, insurance, HOA fees, or other costs. Mortgage payments were calculated based on a 30-year fixed mortgage with a 20% down payment at current interest rates. Effective property tax rates were calculated for each location by dividing the total amount of property taxes paid in a given year by the aggregate housing value, as reported by the Census Bureau.

To improve relevance, only metropolitan areas with at least 100,000 residents were included.

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