Have home prices soared out of sight in your city? If so, you might consider moving to a new place where real estate is more affordable.
But be forewarned: You aren’t going to have a lot of options.
Of the 50 most populous U.S. metro areas, there are just four where buying a home is cheaper than renting one, according to a new analysis from real estate brokerage firm Redfin.
In these cities, home values have stagnated compared to markets in the rest of the country, Redfin says. That is helping to keep them affordable during a time of rising mortgage rates.
Following are the major markets where it makes more sense to buy a home instead of renting.
4. Houston, Texas
The homeownership discount in this metropolitan area: 1.2%
The estimated median mortgage cost in this metropolitan area: $2,343 per month
The estimated median rent in this metropolitan area: $2,371 per month
About 52% of homes in Houston are cheaper to buy than rent, Redfin says. That makes it an attractive market for homebuyers.
In many other markets across the country, it remains cheaper to rent, especially now that mortgage rates are higher. In a summary of Redfin’s findings, Taylor Marr, Redfin deputy chief economist, says:
“I wouldn’t encourage people to squeeze their budgets in order to buy a home when prices are falling and we’re teetering on a recession. In the years leading up to the pandemic, it made sense for some homebuyers to break the rule that says not to spend more than 30% of your income on monthly housing costs, but these times are more risky, so it makes sense to be a little more conservative.”
3. Cleveland, Ohio
The homeownership discount in this metropolitan area: 3.9%
The estimated median mortgage cost in this metropolitan area: $1,730 per month
The estimated median rent in this metropolitan area: $1,800 per month
Redfin notes that Cleveland is a city that rarely experiences home price booms. That also makes it less vulnerable to price busts.
Among homes in the city, 57% are cheaper to buy than rent. The low cost of homes helps make Cleveland one of “The 15 Cheapest Places to Live in America in 2023.”
2. Philadelphia, Pennsylvania
The homeownership discount in this metropolitan area: 6.6%
The estimated median mortgage cost in this metropolitan area: $1,869 per month
The estimated median rent in this metropolitan area: $2,000 per month
Just shy of 6 in 10 homes here — 59% — are cheaper to buy than rent.
But shoppers should prepare to face a little friendly competition in the City of Brotherly Love: Philadelphia is one of the “10 Markets Where Homebuyers Can Still Expect to Face Bidding Wars.”
1. Detroit, Michigan
The homeownership discount in this metropolitan area: 23.6%
The estimated median mortgage cost in this metropolitan area: $1,296 per month
The estimated median rent in this metropolitan area: $1,697 per month
Like Cleveland, Detroit rarely experiences either home price booms or busts. A whopping 80% of properties here are cheaper to buy than rent.
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