Renting is officially cheaper than owning a home across the United States’ 100 largest cities, from New York City to San Francisco.
Though homeownership has long been a beacon for wealth building in the U.S., the latest data shows just how much more expensive owning versus renting is getting by the year. According to a Lendingtree analysis, homeowners in the States pay, on average, a whopping 36.9% per month than renters. That doesn’t include hidden homeownership costs like maintenance, insurance, and taxes.
Ten cities stood out for having the largest gap between median monthly rent and monthly mortgage payments by dollars. San Francisco had the highest gap—its median rent is $2,435 compared to a median mortgage of $4,000—followed by Bridgeport, Conn. with a gap of $1,427 and New York City with a gap of $1,409.
For the past 50 years, buying has most frequently been more expensive than renting, but not at the price gap seen today. Despite this, Matt Schulz, Lendingtree’s chief consumer finance analyst, stresses that homeownership still does provide value in building wealth, even if it’s not for everyone. There’s no general answer on if renting or buying is best right now because the answer depends on the asker.
“Homebuying can represent accomplishment, security, safety and plenty of other things. There’s a reason why homeownership has long been considered part of the ‘American Dream.’ That said, owning can make financial sense depending on your goals,” Schulz said in the Lendingtree analysis. “The equity you can build in a home you own can provide valuable financing options in the future for things like a home remodel, starting a business, or knocking down high-interest debt.”
U.S. cities with the smallest price gap in dollars between renting and homeownership are led by Phoenix, with a gap of $184. Orlando, Fla. takes second place with a $257 gap, followed by Columbia, S.C. at a $271 difference.
For those who do want to own a home, it’s important that, like with investing, you don’t try to time the market. If buying doesn’t make sense, then don’t let anyone pressure you into it.
That being said, “you have more power over things than you realize” when it comes to buying a home and saving money, Schulz said. “Considering different types of mortgages beyond the traditional 30-year fixed mortgages can help you keep costs down. Being flexible when it comes to location and even the characteristics of a home can help, too. Building savings in a high-yield savings account to put toward a down payment is a great idea if you can afford to.” There are many levers to use if homeownership is indeed a goal.