A row of townhouses along a wooded street

It's cheaper to rent than buy in nearly every big city 

A new report from Realtor.com looks at the cost gap between renting and owning and finds that many markets are now significantly more favorable to renters.

March 26, 2024
3 minutes

As if the housing market couldn't be worse for would-be buyers, the latest rental data from Realtor.com helps illustrate how severe home affordability has become across the country. 

What's in the rental report? According to Realtor.com researchers, it is now cheaper to rent than to own in every one of the top 50 metro areas in the U.S. A year ago, that was the case in 45 of the 50 markets analyzed.

The shift is largely thanks to higher buying costs, fueled by high demand coupled with low inventory and elevated borrowing rates in the for-sale market. At the same time, rent prices have begun to come down as developers deliver new rental housing in major cities, the report said. 

"In February, the cost of buying a starter home in the top 50 metros was $1,027 (60.1%) higher than renting one; comparatively, the cost to buy was $865 higher than renting in February 2023 — a $162 higher monthly savings from renting compared to the prior year," Realtor.com researchers wrote.

Where the cost gap between renting and owning is highest: The markets with some of the highest home prices relative to rental prices include many of the usual suspects from the hot pandemic market — think "Zoom towns" and hot Southwest and West Coast markets. In the Austin and Seattle metros, for example, the cost to buy is more than twice the cost to rent.

The 10 metros with the biggest rent vs. buy savings:

  1. Austin-Round Rock-Georgetown, TX – $2,165 monthly rent savings (141.5% difference)

  2. Seattle-Tacoma-Bellevue, WA – $2,422 savings (121.1%)

  3. Phoenix-Mesa-Chandler, AZ  – $1,528 savings (99.0%)

  4. San Francisco-Oakland-Berkeley, CA – $2,689 savings (95.5%)

  5. Los Angeles-Long Beach-Anaheim, CA – $2,539 savings (89.7%)

  6. San Jose-Sunnyvale-Santa Clara, CA – $2,780 savings (86.7%)

  7. Nashville-Davidson-Murfreesboro-Franklin, TN – $1,366 savings (86.0%)

  8. Portland-Vancouver-Hillsboro, OR/WA – $1,396 savings (84.4%)

  9. Sacramento-Roseville-Folsom, CA –  $1,514 savings (82.1%)

  10. Houston-The Woodlands-Sugar Land, TX – $1,103 savings (80.0%)

What should prospective buyers do? There are trade-offs with buying and renting beyond price, and the short-term versus long-term financials also should be part of the equation for anyone considering a home purchase.

"Deciding whether to rent or buy often goes beyond a financial advantage though, and likely depends on a consumer's circumstances. Renters often prize flexibility while the biggest reasons homebuyers cite are that they want a place of their own and to be closer to family and friends," Realtor.com chief economist Danielle Hale said in the report. 

"The financial scales have tipped monthly costs in favor of renting over buying, but it does not bring the benefit of housing wealth gains over time that owning does, and movers should consider their long-term housing plans and personal situation as they make this decision."

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