Record-high house prices, near-record mortgage rates and record-low inventory have made it challenging for many people, especially first-time homebuyers, to buy a home. The upside? Now is a great time to rent.
A recent Bankrate study found that renting is now cheaper than buying in all major U.S. cities. As of February, the typical monthly mortgage payment for a median-priced home ($412,778, per Redfin) was $2,703, while the typical rent was $1,979. That’s a difference of nearly $725 monthly, or more than $8,600 yearly. For some people, that extra $8,600 can go a long way when stashed in an emergency fund.
In some metro areas, such as Detroit, Pittsburgh and Philadelphia, the gap between renting and buying is smaller, with a buy-to-rent ratio of only 2%. In other metro areas, like San Francisco, San Jose and Seattle, the gap is sizable, with the buy-to-rent ratio as high as 180.7%.
Top five metros with the biggest gap between renting and buying
Top five metros with the smallest gap between renting and buying
Key insights from Bankrate's Rent vs. Buy study
- It’s cheaper to rent than to buy in all of the top 50 metros.
- In 21 U.S. metros, the monthly cost of owning is at least 50% more expensive than the monthly cost of renting.
- Nearly 4 in 5 Americans (78%) say owning a home is part of the American Dream.
- Nationwide, the typical home costs nearly 37% more to buy than to rent on a monthly basis.
- The national average interest rate for 30-year mortgages was 7.33% as of April 17, 2024.
Not sure if renting or buying is best for you? Consider these pros and cons.
Pros and cons of renting
Pros
- Lower upfront costs
- Landlord covers maintenance and repairs
- No property taxes or HOA fees
- Utilities may be included in the rent
- Rental insurance is cheaper than homeowners insurance
Cons
- Rent can increase over time
- Won’t build equity
- Rental market is competitive
- Rental lease may not be renewed
- No tax benefits
Pros and cons of buying
Pros
- Can build equity over time
- Helps boost credit
- Fixed monthly mortgage payments (with a fixed-rate mortgage)
- Tax incentives
- Remodel and renovate to your style
Cons
- Higher upfront costs
- Property value can fall
- Competitive housing market
- Maintenance costs
- Takes time to build equity
- Property taxes, homeowners insurance and possible HOA fees
- High mortgage rates
Check out our mortgage calculator below, in partnership with Bankrate, to compare rates.
