If you’re still paying off your mortgage, renting is likely cheaper than owning in each of the nation’s 50 largest metros, according to a new report from LendingTree.
LendingTree’s new report analyzes U.S. Census Bureau data to compare monthly rental and housing payments for homes with and without mortgages in the 50 largest metros.
The report found that on average, the difference between median gross rent and median housing costs for homes with a mortgage is $564 a month. This is lower than in 2019, when renters paid an average of $593 less monthly than homeowners with mortgages. A combination of factors, including record-low interest rates that offset rising home prices, likely contribute to this smaller gap.
Key highlights:
- San Jose has the widest spread in costs between renting and owning a home with a mortgage. The median monthly gross rent is $2,454 and the median monthly housing costs for homes with a mortgage is $3,760, making the difference in costs $1,306.
- New York comes in second with rent at $1,600 and housing costs at $2,850 ($1,250 difference), followed by San Francisco with rent at $2,156 and housing costs at $3,385 ($1,229 difference). Unlike across the 50 metros, this gap widened—from $1,221 in 2019—across the same three metros at the top, though they were ordered differently.
- For metros where the gap between renting and owning a home with a mortgage is the narrowest, Orlando takes the lead with rent at $1,420 and housing costs at $1,652 ($232 difference).
- Phoenix follows at $1,384 rent and $1,630 housing costs ($246 difference), with Jacksonville in third at $1,238 rent and $1,516 housing costs ($278 difference).
- San Jose also has the widest spread in costs between renting and owning a home without a mortgage, with rent at $2,454 and housing costs at $963 ($1,491 difference).
- Second is San Francisco with rent at $2,156 and housing costs at $876 ($1,280 difference), followed by San Diego with rent at $1,908 and housing costs at $748 ($1,160 difference). These figures are mostly unchanged from $1,307 in 2019, when the three metros finished in the same order.
- The gap between renting and owning a home without a mortgage is narrowest in Milwaukee, where rent is $977 and housing costs are $670 ($307 difference).
- Cleveland follows at $887 rent and $567 housing costs ($320 difference), the Buffalo at $888 rent and $557 housing costs ($331 difference).
Major takeaway:
“If home prices do come down in 2023, as they appeared poised to do in many parts of the country, that doesn’t necessarily mean that rent prices will fall in the same way,” said LendingTree’s Senior Economist and report author, Jacob Channel. “While home purchase and rent ultimately tend to trend in the same direction over the long term, they don’t have a one-to-one relationship. As a result, we could continue to see inflated rent prices in some areas, even as home prices decrease.”
With the results of this data, Channel explained that reasons to rent include: not being able to afford the current mortgage rates, not having enough money for a suitable down payment, plans to not live in a home for a long term, and lack of want to maintain a home. For reasons to buy a home, Channel listed the following: making a future investment, taking advantage of certain tax benefits, more freedom over living space, and financial security.
For the full report, click here.
