Renting is now cheaper than owning a typical home in all but one of 35 major metro areas in the US
According to Bankrate’s analysis of Redfin and Zillow housing data, renting is cheaper than buying a typical home in all of the 50 largest U.S. metro areas. In 21 of these metros, the monthly cost of owning is at least 50 percent higher than the monthly cost of renting.
Nationally, owning a home is nearly 37 percent more expensive per month than renting. As of February, the typical monthly mortgage payment for a median-priced home ($412,778, per Redfin) in the U.S. is $2,703, while the typical monthly rent is $1,979.
This trend reflects broader housing market dynamics. Home prices are soaring, and while mortgage interest rates have declined from their 2023 peaks, they remain relatively high. The national average for 30-year mortgages was 7.33 percent as of April 17, up 3 percentage points from March 2022, according to Bankrate’s survey of large lenders. One reason home prices stay elevated is a shortage of homes for sale. Bankrate’s Greg McBride notes that the monthly mortgage cost on a typical home bought today is more than double that of one bought in 2019.
Renting, however, isn't necessarily affordable either. Zillow data shows that asking rents, or what someone looking for a rental would expect to pay today, have increased in 47 of the 50 largest metro areas over the past year, though they aren’t rising as quickly as during the COVID-19 pandemic. Since the beginning of the pandemic, asking rents have grown nearly 30 percent, according to Zillow’s Observed Rent Index (ZORI).
Rents surged in 2021 and 2022 as demand for housing exploded with easing COVID-19 restrictions. Landlords raised prices as many young Americans moved out on their own for job opportunities and people returned to midsize and large metropolitan areas. Previously more affordable places, like Austin, Texas, and Cape Coral, Florida, have become much less affordable due to high demand.
“The long-term trend is that people seem to like the Sun Belt, probably because it’s sunny down there,” says Daryl Fairweather, chief economist of Redfin. “Those places have become more expensive since the pandemic because of how many people are moving in there.”
Housing costs are also heavily influenced by location. In high-cost, coastal metros such as San Francisco or Seattle, renting is generally much more affordable. For example, in Seattle, a typical home costs roughly 125 percent more to own than to rent on a monthly basis. Bankrate’s analysis found that renting is more affordable in the short run in metros with lower living costs, such as Detroit or Pittsburgh, but the differences between renting and buying costs are smaller, making it easier to switch from renter to homeowner. In Detroit, a typical home costs only 2 percent more to own than to rent on a monthly basis.