Realtor.com revealed in a report based on December 2022 data that in 30 of the 50 largest cities in the country, it is more profitable to rent a home than to buy one. The cost of a monthly payment to lease a home was approximately $1,000 less than the cost to purchase it.
To calculate the monthly cost of buying a home, the real estate website relied on median sales prices for studio, one-bedroom and two-bedroom homes at a 7% mortgage rate.
Cheaper to rent a house
Realtor ranked Austin, Texas as the No. 1 city where it was less expensive to rent than to buy a home. The average monthly lease in December 2022 was $1,659, while the monthly purchase cost was $3,672.
In other cities such as San Francisco, Seattle, Boston and Portland it was also cheaper to rent than to buy. According to the report:
- San Francisco: $2,943 (rent) vs. $5,798 (buy).
- Seattle: $2,059 (rent) vs. $3,831 (buy).
- Boston: $2,868 (rent) vs. $4,965 (buy).
- Portland: $1,750 (rent) vs. $2,996 (buy).
The study also found some metropolitan areas where renting was slightly more affordable, without as much of a margin of difference relative to buying. Among them are San Jose and Los Angeles (California) and Phoenix (Arizona).
Cheaper to buy
The report also revealed the 20 cities where it is cheaper to buy than to rent. The No. 1 spot goes to Memphis, which had the largest difference in median monthly rent and purchase costs in December. Purchasing a home in the city cost approximately $847 per month, almost $400 less than the average rental cost of $1,258. The other cities are:
- Pittsburgh: $1,445 (buy) vs. $1,097 (rent).
- Birmingham: $1,149 (buy) vs. $879 (rent).
- St Louis: $1,211 (buy) dollars vs. $1,128 (rent).
- Baltimore: $1,749 (buy) vs. $1,684 (rent).
