<!–>
The cost of housing in the U.S. has been escalating for years, creating a difficult financial dilemma for many households trying to decide between buying or renting.
While renting is the more affordable option in most markets, a new study reveals that buying may be more affordable in some cities.
–>
The study, conducted by Construction Coverage, analyzed data from Zillow, the U.S. Census Bureau, and Freddie Mac to calculate the percentage difference between the typical monthly mortgage payment – including property taxes – and monthly rent payments for a median-priced home.
Typical home is 21% higher than monthly rent payment
<!–>
By the numbers:
–>
According to the study, the monthly mortgage payment for the typical home is now 21% higher than the typical monthly rent payment across the country.
<!–>
However, the data found that there is some good news for prospective buyers in specific areas.
–>
A “For Sale” sign in front of a home in San Jose, California, US, on Thursday, Sept. 5, 2024. (Credit: David Paul Morris/Bloomberg via Getty Images) <!–>
–>
<!–>
Out of the 343 cities analyzed, 32 locations were found to be more affordable for buyers than renters. These locations are primarily concentrated in Southern states like Alabama, Georgia, and Texas, as well as Rust Belt regions like Ohio and Michigan.
–>
In these areas, relatively low home prices made purchasing a home more viable compared to renting.
<!–>
Cities where buying is better than renting
–> <!–>
- Detroit, Michigan: -60.1% (premium/discount of buying vs. renting)
- Jackson, Mississippi: -59.8%
- Cleveland, Ohio: -39.3%
- Birmingham, Alabama: -36.3%
- Montgomery, Alabama: -31.1%
- Baltimore, Maryland: -23.6%
- Memphis, Tennessee: -20.8%
- Shreveport, Louisiana: -20.2%
- Toledo, Ohio: -19.4%
- Akron, Ohio: -16.9%
- Philadelphia, Pennsylvania: -16.4%
- Columbus, Georgia: -13.2%
- Augusta, Georgia: -13%
- Peoria, Illinois: -12.6%
- Beaumont, Texas: -12.5%
- Tuscaloosa, Alabama: -12.3%
- Hartford, Connecticut: -12.2%
- Dayton, Ohio: -10.3%
- St. Louis, Missouri: -10.2%
- Brownsville, Texas: -9.1%
- Macon-Bill County, Georgia: -8.6%
- New Orleans, Louisiana: -7.8%
- Mobile, Alabama: -7.5%
- South Bend, Indiana: -7.4%
- Waco, Texas: -7%
- Dearborn, Michigan: -4.8%
- Syracuse, New York: -4.7%
- Columbia, South Carolina: -3.9%
- Lansing, Michigan: -2.8%
- Pompano Beach, Florida: -2.2%
- Pittsburgh, Pennsylvania: -1.6%
- Lehigh Acres, Florida: -1.2%
–>
Home prices surge
<!–>
The backstory:
–>
Over the past few years, the U.S. has seen skyrocketing home prices, a consequence of rising competition, low supply, and historically low interest rates in 2020 and 2021.
<!–>
While interest rates have increased to help cool the market, home prices remain high, putting homeownership out of reach for many potential buyers. As a result, renters have been increasingly squeezed by high rental costs as well, creating a dual challenge for non-homeowners.
–>
RELATED: Is it cheaper to rent or buy a home in 2025?
<!–>
Mortgage rates have more than doubled since reaching record lows in January 2021, and while home price growth has slowed, the median home price remains approximately 33% higher over the same period.
–>
A 2025 Rental Affordability Report, released in February by the real estate analytics firm ATTOM, showed that both owning and renting remain a challenge for average American workers, eating up between 25 to 60% of their wages.
<!–>
The Source: The information for this story was provided by a study conducted by Construction Coverage. The company used a monthly mortgage payment reflecting a 30-year mortgage with a 10% down payment at a 6.85% interest rate based on the current ZHVI as of January, 2025. This story was reported from Los Angeles.
–> <!–>
–>