Renting is a valuable situation for someone who does not plan on staying in one place for too long, renting in order to save money for a down payment for a home, or renting to just take advantage of short-term savings.
However, buying a home is still a valuable investment that is cheaper in the long run.
According to LendingTree Senior Economist Jacob Channel, cost is one of the biggest factors to consider when choosing between buying and renting. LendingTree analyzed U.S. Census Bureau data to compare monthly rental and housing payments for homes with and without mortgages in the 50 largest metros in the U.S. We found that median rent costs are lower than median homeowner costs for those with mortgages but higher than costs for homeowners without mortgages.
Key findings from the LendingTree report:
- If you’re still paying off your mortgage, renting is likely cheaper than owning in each of the nation’s 50 largest metros. The difference in 2022 between median housing costs for homes with a mortgage and median gross rent was $563 a month — $1 less than $564 in 2021.
- The spread in costs between renting and owning a home with a mortgage is widest in the San Jose, California, San Francisco, and New York City metros. The difference between the median monthly housing costs for homes with a mortgage and the median monthly gross rent in these metros in 2022 was $1,341, $1,303, and $1,289, respectively. These differences are up from $1,306, $1,229, and $1,250 in 2021.
- Phoenix, Orlando, Florida, Jacksonville, Florida., and Atlanta have the narrowest gaps between renting and owning a home with a mortgage. In Phoenix and Orlando, median gross rent costs in 2022 were $87 and $145 less than median monthly housing costs for homes with a mortgage. In both Jacksonville and Atlanta, the difference was $216. While rent costs were still lower, the gap shrank between 2021 and 2022. In Phoenix, the difference decreased by $159 from 2021. It decreased by $87 in Orlando, $71 in Atlanta and $62 in Jacksonville. These smaller differences were the result of rents rising faster than homeowner costs between 2021 and 2022 in these metros.
- San Jose, San Francisco and San Diego are the metros where the spread in costs between renting and owning a home without a mortgage (i.e., homes purchased with cash or homes with paid-off mortgages) is the widest. In San Jose, the median monthly gross rent was $1,547 more each month in 2022 than the median monthly housing costs for homes without a mortgage. In San Francisco and San Diego, it was $1,362 and $1,254 more. Even in parts of the U.S. where buying a home is usually anything but cheap, homeownership can save money relative to renting in some instances.
- The gap between renting and owning a home without a mortgage is the narrowest in Hartford, Connecticut, Buffalo, New York, and Cleveland. In these metros, the median monthly gross rent in 2022 was $330, $349, and $353 more, respectively, than the median monthly housing costs for homes without a mortgage. While these figures are smaller than in places like San Jose, a $300-plus monthly difference is still a decent chunk of change.
So, is it better to rent or own? According to LendingTree, keep in mind there’s no right or wrong answer. Carefully consider your budget, lifestyle, and financial goals to help you choose your best option.
Click here to see a list of the top cities to rent in and another list of cities where to buy.
