Real Estate Map Shows Where It's Cheaper to Rent Than Buy
The idea of working hard, saving up and buying a home has always been an integral part of the American dream.
In the current housing market however, renting might be the more financially prudent move.
A new study from Bankrate has revealed that in all 50 of the largest U.S. metros it is cheaper to rent than to buy.
The study, which was based on an analysis of Zillow and Redfin housing data, found the cost of owning a house to be 37 percent higher than renting per month.
Whilst average rents in the U.S. are around $1,979 per month, the typical mortgage payments for median-priced homes sit much higher, at just over $2,700.
"I don't think anyone would say that buying in this market is easy," said Skylar Olsen, chief economist at Zillow.
"Those who already owned a home or were able to sneak in and buy one before rates doubled in 2022 are probably feeling grateful."
Another study, conducted by the Harris Poll earlier this year found that 72 percent of Americans are not actively looking to buy a residence at all.
Bankrate's report identified the five American cities with the largest difference between mortgage and rent costs, which can be seen in the below.
Renting vs. buying in the 50 largest metros
Hover over the metro area to see the typical rent, mortgage and buy-to-rent ratio
Metro areas in Austin, Salt Lake City, Seattle, San Jose and San Francisco had some of the highest buy-to-rent ratios, according to the study, with ratios between 86.5 percent and 180.7 percent.
Austin-Round Rock-Georgetown, Texas
Average monthly rent: $1,753
Average monthly mortgage: $3,260
Salt Lake City, Utah
Average monthly rent: $1,673
Average monthly mortgage: $3,161
Seattle-Tacoma-Bellevue, Washington
Average monthly rent: $2,191
Average monthly mortgage: $4,930
San Jose-Sunnyvale-Santa Clara, California
Average monthly rent: $3,255
Average monthly mortgage: $8,539
San Francisco-Oakland-Berkeley, California
Average monthly rent: $3,024
Average monthly mortgage: $8,486
The study also revealed the city metros with the smallest gaps between rent and mortgage costs:
Detroit, Michigan
Pittsburgh, Pennsylvania
Philadelphia, Pennsylvania
Cleveland, Ohio
Buffalo, New York
The buy-to-rent ratios for these cities was much narrower, ranging from just over 20 percent to a mere two percent.
Redfin chief economist Daryl Fairweather said: "If you don't have much cash to put towards a purchase, it's going to be a lot more expensive to afford that mortgage in the short term until you can refinance. It might be more beneficial for you to rent, given that rents are stable right now."
Mortgage rates appear set to remain stubbornly high in the near future.
The Federal Reserve announced on Wednesday afternoon that its interest rate will remain at 5.5 percent.