Some prospective homebuyers are unsure if they should take the plunge or rent instead. Renting might be the best option if a person does not have enough cash for a down payment or they are unsure about setting roots in one area, but buying a home can be a good long-term investment. Cost is one of the biggest factors, so to get some perspective LendingTree recently compared monthly rental and monthly mortgage payments for homes in the 50 largest U.S. metros to rank the top metros for buying and renting. Here are the top 10 metros where renting is cheaper than owning a home:
- Louisville, Kentucky -$329
- Milwaukee -$301
- Oklahoma City -$300
- Boston -$284
- San Francisco -$275
- New York -$249
- Providence, Rhode Island -$226
- Philadelphia -$207
- Raleigh, North Carolina -$183
- Chicago -$182
Specifically, in the metros with the cheapest median rents compared to median mortgages, Louisville, Milwaukee, and Oklahoma City median rent costs are on an average $310 cheaper than median mortgage costs. Four of the top 10 metros where monthly rents are higher than monthly mortgage payments are in Florida, the most expensive are in Miami and Orlando.; and Virginia where median mortgage payments are an average of $215 cheaper than median rent payments.
The size of the home matters too, for average-sized houses, buying is usually a better deal but for the largest and smallest homes, renting is often the cheaper option. In 39 of the largest metros, zero-bedroom homes such as lofts and studios, the median rent is $277 cheaper than the average median mortgage payment. In 33 areas, it is cheaper to buy a one-bedroom home than to rent a one, the study found. The average median mortgage payment for a one-bedroom home is $42 cheaper than the average median rent payment.
Two-bedroom homes are usually cheaper to buy than rent, but this is true in only It is only 9 of the study’s 50 metros where the average mortgage costs for two-bedroom homes are around $117 cheaper than median rent costs. The largest group found in the U.S., three bedroom homes, have cheaper median mortgage payments than median rent payments by an average of $73. It is cheaper to rent a four-bedroom home in 22 of the nation’s largest metros, while it is cheaper to buy in 28.
Although it is cheaper to buy a home in the majority of the nation’s metros, areas like New York and Boston differ with an average median rent of $29 cheaper than the average median mortgage cost. In all but 7 metros it is $304 cheaper to rent than to take on an average mortgage cost.
See the entire study here.