Which U.S. City is Best for Buying or Renting

Everybody wants a piece of the American Dream. But living that dream is becoming increasingly expensive. Rent prices are soaring nationwide, and home prices are only starting to scrape the bottom of the housing bubble.

In January, home prices were lower than annual rents in 64% of the 100 largest metropolitan areas in the country.

With apartment rents rising by double digits in many places, buying is more affordable than renting in some cities. And while most people looking for a suitable place to live feel more inclined to rent, it might be more cost-effective to buy a home in some cities. The median price of a home sold each month was less than 30% of annual rents in six of the ten largest U.S. cities.

Looking at the national median home prices and median monthly rents for four-bedroom homes, we’ve curated a list of the best cities to buy and/or rent. It’s based on an in-depth analysis of these properties and purchase data.

Where Buying is Better?

Of course, affordability in any given city depends on specific factors like household income, down payment savings, and other financial obligations.

Homebuyers should consult a financial adviser to determine what they can afford and how much money they’ll need for a down payment. In addition, online browsing is also very effective; subscribe to a reliable internet service provider for consistency.

Where Renting is Better?

Rents are also skyrocketing in Florida, where snowbirds have fled the cold weather for warmer climates. In addition, the pandemic has turned Miami into one of the most expensive rental markets in the country.

Despite significant cities’ skyrocketing home prices, some places remain more affordable to rent than buy.

So if you are looking for a new job, it may make sense to wait until you find one before buying a home since your income is likely to increase over time.

We found the cities where renting is more affordable than buying based on their rental and purchase data analysis. And, also the cities where it’s more affordable to rent than buy. The places where renting can be broken down into the following demographics:

Wealthy towns
College towns

Wealthy Towns

The metro areas where renting is more convenient include San Jose, Honolulu, New York City, and Stamford. Renting becomes a better option for people who live in these cities because they are all costly.

Home prices are high in San Jose, Honolulu, and New York City, but they’re not the most expensive of the bunch. Prices in Stamford are about 3% lower than their annualized monthly rent.

Renting is more affordable for people who work in these cities and can’t afford to buy their homes.

College Towns

In addition to wealthy cities, there are college towns where renting is more affordable than buying. Among the top ten cities in Santa Cruz, Calif., and four other California cities — Berkeley, Oakland, Los Angeles, and Sacramento — cut as well.

These areas all have a high population of students, so it’s typical for rentals to be more expensive than in other neighborhoods.

If you’re young, renting might be a better option because student loan debt can complicate buying a home. The survey found that people just out of college have the most challenging time affording rent and a monthly mortgage payment.

Buying often becomes more affordable after college graduates establish themselves financially to pay off their loans quickly.

Where Renting and Buying are About the Same

There are several cities where renting and buying are nearly equal. Based on our research, these cities have median home prices that need to rise 17% before being more financially feasible for people to buy than rent.

These home price increases could take more than five years in Boston, San Francisco, Washington D.C., Seattle, and Denver.

The cities where it’s about the same include Boston, San Francisco, Washington D.C., Seattle, and Denver. However, the towns also have many millennials just starting their careers and may not afford to buy homes as quickly as people with steadier incomes.

However, the rental market is very competitive in some of these cities.

Conclusion

Despite the variability in the costs of renting vs. buying among U.S. cities, it’s clear that affordability affects both renting and buying decisions. For example, people who cannot purchase a home yet are likely to witness their monetary situation improve over time, making renting and buying more attractive.