Renting is Now Cheaper Than Buying in All 50 of the Largest
U.S. Metros
Metros in the West have the biggest differences between renting and buying costs
NEW YORK - April 29, 2024 - Renting a typical home is now cheaper than buying one
in all 50 of the largest U.S. metros in 2024, according to a new Bankrate study.
Bankrate analyzed typical monthly mortgage payments and typical monthly rent for all
homes across all 50 of the largest metro statistical areas (MSAs) in the United States to
compare the monthly cost of renting vs. buying a home. The complete methodology for
the study is included below. For the full report, please visit:
https://www.bankrate.com/real-estate/rent-vs-buy-affordability-study/
Bankrate’s report found that the typical monthly mortgage payment of a median-priced
home ($412,778, per Redfin) in the United States was $2,703, as of February 2024. In
comparison, the typical national monthly rent was $1,979 as of February 2024, showing
a nearly 37% gap between the typical cost of rent vs. the typical monthly mortgage
payment nationwide.
In 21 U.S. metros, the typical monthly cost of owning is at least 50% more expensive
than the typical monthly cost of renting.
“For those weighing whether they should rent or buy right now, all signs point to renting
as the most cost-effective option in most major U.S. cities,” said Bankrate Analyst Alex
Gailey. “The combination of high home prices, elevated mortgage rates and low
inventory creates a strong headwind for aspiring homeowners. Compared to a few
years ago, Americans in the market for a home now either need to be able to make a
significantly larger down payment or must allocate a larger portion of their monthly
budget to their mortgage payment.”
The West sees the biggest difference between renting and buying according to
Bankrate’s report, with four out of the top five metros with the biggest gaps being
located in the region and tend to have a higher cost of living.
Metro Areas With the Biggest Gap Between Renting and Buying Costs
Metro Statistical Area (MSA)
Typical monthly
rent
(February 2024)
Typical monthly
mortgage
payment
(February 2024)
Buy-to-rent
ratio
1) San Francisco-Oakland-Berkeley, CA
$3,024
$8,486
180.7%
2) San Jose-Sunnyvale-Santa Clara, CA
$3,255
$8,539
162.3%
3) Seattle-Tacoma-Bellevue, WA
$2,191
$4,930
125%
4) Salt Lake City, UT
$1,673
$3,161
89%
5) Austin-Round Rock-Georgetown, TX
$1,753
$3,269
86.5%
Rounding out the 10 metros with the biggest difference in renting vs. buying are Los
Angeles-Long Beach-Anaheim, CA, Portland-Vancouver-Hillsboro, OR-WA, San
Diego-Chula Vista-Carlsbad, CA, Denver-Aurora-Lakewood, CO, and Dallas-Fort
Worth-Arlington, TX.
On the other end, the metros with the smallest price gaps between renting and buying
costs are located in the Midwest and Northeast and tend to have a lower cost of living.
While these gaps are smaller, it is still cheaper to rent in these areas, as with all the
metros in Bankrate’s report.
Metro Areas With the Smallest Gap Between Renting and Buying Costs
Metro Statistical Area (MSA)
Typical
monthly rent
(February
2024)
Typical monthly
mortgage
payment
(February 2024)
Buy-to-rent-ratio
1) Detroit-Warren-Dearborn, MI
$1,395
$1,423
2%
2) Pittsburgh, PA
$1,415
$1,488
5.2%
3) Philadelphia-Camden-Wilmington,
PA-NJ-DE-MD
$1,829
$1,988
8.7%
4) Cleveland-Elyria, OH
$1,377
$1,537
11.6%
5) Buffalo-Cheektowaga, NY
$1,295
$1,556
20.2%
The remainder of the 10 metros with the smallest gaps between renting and buying
costs are Indianapolis-Carmel-Anderson, IN, Chicago-Naperville-Elgin, IL, St. Louis,
MO-IL, Cincinnati, OH-KY-IN, and Tampa-St. Petersburg-Clearwater, FL.
“The rent vs. buy decision isn’t just a financial decision, but also a lifestyle choice,”
added Gailey. “If you crave flexibility, freedom from maintenance and repairs, and have
found other ways to build long-term wealth, you’re more likely a renter. If you’re in a
financially sound position, plan to stay put for several years, and want to build long-term
wealth, you’re more likely a buyer.”
Methodology:
Bankrate's Rent vs. Buy Study analyzed typical monthly mortgage payments and typical
monthly rents for all homes in the 50 most populated U.S. metros to compare the
monthly cost of buying vs. renting.
Typical monthly rents are measured by Zillow’s Observed Rent Index (ZORI) as of Feb.
29, 2024, which is the average of the middle 30 percent of asking rent prices (35th to
65th percentile) — or what someone in the market for a rental would expect to pay
today. ZORI accounts for changes in the types of homes available to rent in any given
month by calculating price differences for the same rental unit over time, and then
aggregating those differences. For typical monthly rents, Bankrate factored in the
monthly cost of renters insurance for every metro. Bankrate used one percent of typical
monthly rent as an approximation for the monthly cost of renters insurance.
Bankrate utilized Redfin’s median sale price data from February 2024 to calculate
typical monthly mortgage payments for the 50 largest metros. When estimating typical
monthly mortgage payments for every metro, Bankrate assumed a 20 percent down
payment, no HOA fees or PMI, the average homeowners insurance rate for that metro,
average property taxes for that metro and the national average rate for a 30-year
mortgage (7.01%) as of March 27, per Bankrate’s survey of large lenders. Bankrate
utilized 2022 average property tax data from ATTOM and average homeowners
insurance rates as of April 2024 from Bankrate’s Quadrant Information Services data.
With the exception of property taxes, homeowners insurance and renters insurance, the
study didn’t factor in upfront and ongoing costs associated with renting or buying
(closing costs, maintenance costs, rental application fees or security deposit). Home
equity built over time, the ability to refinance a mortgage for a lower rate or homeowner
tax benefits were also not factored in the study. The quality of rental homes may not
match the quality of homes for sale, and seasonality in the housing market may impact
the analysis. Results in this study in no way indicate approval or financing of a
mortgage.
About Bankrate:
Bankrate has guided savers and spenders through the next steps of their financial
journeys since 1976. Whether it's rates or information on mortgages, investing, credit
cards, personal loans, insurance, taxes or retirement, the company offers various free
resources to help consumers reach their goals. From product comparison tools to
award-winning editorial content, Bankrate provides objective information and actionable
next steps. Bankrate also aggregates rate information from over 4,800 institutions on
more than 300 financial products, with coverage in more than 600 local markets. It’s
why over 100 million people put their trust in Bankrate every year.
For more information:
Abby Yarber
Public Relations Specialist
(704) 697-1372
