A study by Realtor.com revealed that renting a home is cheaper than buying one in the 50 main metropolitan areas of the country. For new homeowners, the margin differential between the cost of renting and buying stands at 60%:
In all of the 50 largest U.S. metros, renting a starter home is a more affordable option than buying one. In these markets, the monthly cost of buying a starter home in February 2024 was $1,027 more, or 60.1% higher, than the cost of renting.
According to the study, "Among the top considerations are the financial costs and benefits of renting versus owning, and one approach is to compare the monthly costs of renting a home against buying a home. With such cost comparisons, we can identify whether a market favors renting or buying. This is particularly important given today’s landscape marked by elevated mortgage rates and still-high home prices posing substantial challenges for would-be homeowners."
Voz Media spoke with realtor Gabriel Perozo, who said that the high interest rates set by the Federal Reserve are one of the main factors influencing citizens to opt for renting instead of becoming homeowners.
The most affected cities
In some cities such as Austin, Texas, the difference is more than double. The monthly cost of buying a home is $2,165 higher than renting. Similar differences exist in Seattle and Phoenix, where the cost of buying far exceeds the cost of renting.
San Francisco, Los Angeles, San Jose and Sacramento, Calif., as well as Nashville, Tenn.; Portland, Ore. and Houston rounded out the top 10 cities with the greatest price difference between buying and renting.
This trend has changed in just a matter of a year. Realtor.com's 2023 Rental Report found that renting a starter home was more affordable than buying in 45 of the nation's largest cities.
