Editor's Note: This story originally appeared on Construction Coverage.
Price increases throughout the U.S. economy over the past few years have made nearly everything more expensive, but perhaps no spending category has squeezed Americans’ budgets like the cost of housing.
Between high costs to buy a home and skyrocketing rents, non-homeowners are faced with impossible choices throughout the market.
Throughout 2020 and 2021, low interest rates and rising household savings and incomes positioned many Americans to buy real estate. But high competition and low supply created a boom in the residential real estate market that sent home prices in the U.S. to record highs.
With home prices elevated and interest rates rising to cool the market, more would-be buyers have been priced out, increasing the competitiveness of the rental market and in turn driving rents upward.
The following is a breakdown of the geographic markets where home costs remain relatively low, allowing buyers to save relative to the cost of renting.
The analysis was conducted by Construction Coverage using data from Zillow, the U.S. Census Bureau, and Freddie Mac. For more information, refer to the methodology at the end.
1. Detroit, MI
- Premium/discount of buying vs. renting: -61.0%
- Median monthly mortgage payment: $486
- Median monthly rent: $1,245
- Median home price: $65,800
2. Cleveland, OH
- Premium/discount of buying vs. renting: -44.6%
- Median monthly mortgage payment: $732
- Median monthly rent: $1,321
- Median home price: $98,485
3. Memphis, TN
- Premium/discount of buying vs. renting: -18.5%
- Median monthly mortgage payment: $1,029
- Median monthly rent: $1,262
- Median home price: $144,552
4. Baltimore, MD
- Premium/discount of buying vs. renting: -17.8%
- Median monthly mortgage payment: $1,319
- Median monthly rent: $1,604
- Median home price: $177,573
5. Philadelphia, PA
- Premium/discount of buying vs. renting: -10.6%
- Median monthly mortgage payment: $1,483
- Median monthly rent: $1,660
- Median home price: $214,422
6. Chicago, IL
- Premium/discount of buying vs. renting: 5.5%
- Median monthly mortgage payment: $2,112
- Median monthly rent: $2,002
- Median home price: $283,389
7. New Orleans, LA
- Premium/discount of buying vs. renting: 5.6%
- Median monthly mortgage payment: $1,717
- Median monthly rent: $1,626
- Median home price: $248,468
8. Tulsa, OK
- Premium/discount of buying vs. renting: 8.4%
- Median monthly mortgage payment: $1,348
- Median monthly rent: $1,244
- Median home price: $191,005
9. El Paso, TX
- Premium/discount of buying vs. renting: 10.1%
- Median monthly mortgage payment: $1,662
- Median monthly rent: $1,510
- Median home price: $213,522
10. Oklahoma City, OK
- Premium/discount of buying vs. renting: 11.1%
- Median monthly mortgage payment: $1,373
- Median monthly rent: $1,236
- Median home price: $195,635
11. Indianapolis, IN
- Premium/discount of buying vs. renting: 12.3%
- Median monthly mortgage payment: $1,509
- Median monthly rent: $1,344
- Median home price: $217,513
12. Kansas City, MO
- Premium/discount of buying vs. renting: 18.8%
- Median monthly mortgage payment: $1,621
- Median monthly rent: $1,364
- Median home price: $226,632
13. Milwaukee, WI
- Premium/discount of buying vs. renting: 19.5%
- Median monthly mortgage payment: $1,465
- Median monthly rent: $1,225
- Median home price: $187,383
14. Tampa, FL
- Premium/discount of buying vs. renting: 19.7%
- Median monthly mortgage payment: $2,602
- Median monthly rent: $2,173
- Median home price: $379,142
15. Louisville, KY
- Premium/discount of buying vs. renting: 20.4%
- Median monthly mortgage payment: $1,593
- Median monthly rent: $1,324
- Median home price: $229,601
Methodology
The data used in this study is from Zillow’s “Home Value Index (ZHVI)” and “Observed Rent Index (ZORI),” U.S. Census Bureau’s “2022 American Community Survey,” and Freddie Mac’s “Primary Mortgage Market Survey.”
To determine the relative cost of buying vs. renting by location, researchers calculated the percentage difference in the monthly mortgage payment and property taxes for a median price home compared to the monthly rent payment for a median price rental.
The monthly mortgage payment reflects a 30-year mortgage with a 10% down payment at a 7.44% interest rate.
Monthly property tax estimates were obtained using “American Community Survey” data by dividing aggregate annual property taxes paid in each location by the aggregate value of all homes.
The resulting percentage was multiplied by the median home price and divided by 12.
Only locations with available data from all sources were included in the analysis. To improve relevance, cities were divided into groups based on population size.
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