Is Renting More Affordable than Purchasing a Home?

Posted On: May 2, 2024

Renting an apartment or home seems to be more affordable than buying a home for many Americans. According to a new BankRate.com Survey, renting is 37% cheaper than buying a home in all 50 of America’s largest metropolitan areas. Data published in February of 2024 shows the average mortgage price at more than $2,700. At the same time, the cost to rent averaged $1,900.

Housing experts say the fact that is cheaper to rent in all 50 metro areas is a reflection of broader market challenges and trends. Home prices remain high, Mortgage remains have soared, and the overall inventory of homes is low across the country. Housing expert Skyler Olsen offers the example of a typical home today costing double the price of the same home in 2019.

“I don’t think anyone would say that buying in this market is easy. Those who already owned a home or were able to sneak in and buy one before rates doubled in 2022 are probably feeling grateful.”
Skylar Olsen, Zillow Chief Economist

Additionally, experts in the report noted home rental rates surged in 2021 and 2022 after stifled demand for housing increased with easing COVID-19 restrictions.

Renting vs. Buying

In 21 of the 50 metro areas surveyed, the cost to own a home is at least 50% more expensive than renting. Still, the data is not deterring from the dream of homeownership. Bankrate found nearly 4 in 5 Americans (78 percent) say owning a home is part of the American dream.

Now, millions face the question to rent or buy. Experts suggest for those who can afford to buy a home to begin the process but consider the following:

Don’t rush into anything.
Figure out where you see yourself living and for how long.
Consider how you’re building long-term wealth.

Soon-to-be homeowners will find mortgage rates above 7%. Meanwhile, the average price of a home nationwide is $393,000.

As for those renting, experts say if you want to buy it is important to create a saving plan to help reach the goal of homeownership. It costs more to sign a lease now than ever before. The following cities saw the highest yearly increase in cost.