Renting is Cheaper Than Buying in All But Two Major Cities

In most places in America, you’re better off renting, according to a new study.

According to the Realtor.com January Rent Report, renting is cheaper than buying in all but two of the country’s 50 major metropolitan areas. A year ago, homebuyers had the advantage in six metro areas, showing that home ownership is less affordable and increasingly challenging.

Rent declined across the country after spiking in the wake of the pandemic. January’s median rent was lower than it had been during the same time in the last two years, but at $1,703, it was still $257 higher than it was in January 2020. 

“This relative cost advantage is one of the reasons we expect an increase in renter households and declines in the homeownership rate in 2025,” said Danielle Hale, chief economist at Realtor.com.

Only in Detroit, Pittsburgh Is It Cheaper to Own Than Rent

Detroit and Pittsburgh were the only two cities where it was cheaper to buy a house than rent an apartment, the data showed. Both Pittsburgh ($229,700) and Detroit ($239,950) had median listing prices that were far lower than the national median listing price of $400,500.

Pittsburgh residents only need 19.7% of the median income to purchase a home, the lowest share required for homeownership in the top 50 metro areas. Renting took up 23.5% of the median income.

Detroit’s homeownership costs were a slightly larger portion of income than Pittsburg’s at 20.7%. However, the gap between that and the portion of income needed to rent is smaller, at only 1 percentage point.

Housing affordability was worse in larger metro areas. In Los Angeles, it took nearly 75% of a median-wage earner’s paycheck to buy a home, compared with 36% to rent. Several other California cities, including Riverside, Sacramento, San Diego, San Jose, and San Francisco, demanded more than 40% of income for homeownership. Higher mortgage rates, limited inventory, and rising home values were the primary factors driving up home buying costs. 

As Renting Becomes Cheaper, Renters Staying Longer

Rent has become less expensive in several major cities, including Memphis, Tenn., Los Angeles, Las Vegas, Houston, Chicago and Charlotte, the Realtor.com data showed.  And with renting offering a better value, many people are choosing to stay in those properties longer, a study from rental information website Point2Homes showed.

According to the study, which compared Census Bureau data from 2017 and 2022, the number of renters who moved after one year or less fell by nearly 5%, while the number of renters staying in their properties for five years or more increased by two percentage points.