Places Where It’s Cheaper to Buy Than Rent

December 19, 2017

Despite escalating home prices, Americans in many cities still can find it more affordable to own a home with a mortgage than to rent nationwide, according to the Urban Institute.

The think tank’s research shows that a median-income family spends 28 percent of its household income to pay the median rent for a three-bedroom house. On the other hand, they’ll spend 25 percent of their income for a monthly mortgage payment (principal, interest, taxes, and insurance) on a median-price home with a 30-year fixed-rate mortgage and 3.5 percent down payment. If a household makes a 20 percent payment, they’ll see a reduction in their monthly mortgage to 22 percent of their income.

Still, affordability varies quite a bit across the country. In a new study of 33 metros, Urban Institute researchers found Miami families will save the most by buying over renting. The metro had the nation’s largest negative rent gap. A median-income family in the area would save nearly 11 percent of their income by purchasing a median-priced home with a 3.5 percent down payment instead of renting. In Detroit, homeowners could save 7.1 percent of their income by buying.

The following are the 17 cities where it’s cheaper to buy a home rather than rent:

  1. Miami-Fort Lauderdale, Fla.: -10.9% 
  2. Detroit: -7.1% 
  3. Chicago: -5.6% 
  4. Philadelphia: -5.0% 
  5. Tampa-St. Petersburg, Fla.: -4.6% 
  6. Pittsburgh: -4.5% 
  7. Cleveland: -3.5% 
  8. Cincinnati:  -3.4% 
  9. Orlando, Fla.: -3.2% 
  10. Houston: -2.5% 
  11. San Antonio, Texas: -2.3% 
  12. New York: -1.8% 
  13. Minneapolis-St. Paul, Minn.: -1.5% 
  14. Kansas City, Mo.: -1.4% 
  15. Columbus, Ohio: -1.1% 
  16. Boston: -0.6% 
  17. Atlanta: -0.1% 

Source: “16 Cities Where It’s More Affordable to Rent Than to Own,” USA Today (Dec. 18, 2017)