Renting Is More Affordable Than Buying a Home in 96% of Major U.S. Cities

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Aug 27, 2024, 08:47 ET

On average, homeowners spend $3,468 more annually, or $289 more monthly, than renters nationwide.

ST. LOUIS, Aug. 27, 2024 /PRNewswire/ -- On a pure dollar basis, monthly rent costs are cheaper than monthly housing payments in 48 of the 50 most populous U.S. cities, according to a new study from Clever Real Estate, a St. Louis-based real estate company.

The analysis, which considers principal, interest, taxes, and homeowners insurance, shows that monthly home payments are more affordable than rent in only Cleveland and Pittsburgh.

The 50 Most Populous Metros, Ranked by Price-to-Rent Ratio.

The price-to-rent ratio, calculated by dividing the median home price by the median annual rent, indicates that a ratio of 15 or less strongly favors buying, while a ratio of 21 or more strongly favors renting. Based solely on this ratio and not additional monthly costs, it's better to buy in 18 of the 50 most populous U.S. metros.

Cleveland is the best metro for homebuyers, with the lowest price-to-rent ratio (11) and home prices ($187,413) of the 50 most-populous U.S. metros. Nationally, the price-to-rent ratio sits at 14.3 — up from 13 in 2019.

The typical monthly home payment in Cleveland is $1,331, compared to $1,426 for rent, saving homeowners $95 monthly, or $1,140 yearly.

In the most expensive metro, San Jose, renters save an impressive $5,598 monthly, $5,309 more than the national average of $289 monthly.

It would take over 14 years' worth of rent to afford a home outright in the typical metro area and a whopping 38 years for a home in San Jose.

The most affordable cities for home buyers based on price-to-rent ratios are:

Cleveland (11)
Pittsburgh (11.9)
Chicago (12.1)
New Orleans (12.8)
Memphis (12.9)
Birmingham (13.2)
Detroit (13.6)
St. Louis (13.6)
Cincinnati (13.8)
Indianapolis (13.9)

The worst cities for home buyers, with price-to-rent ratios over 21 are:

San Jose (37.6)
San Francisco (30.7)
Los Angeles (26.4)
Seattle (25.9)
Salt Lake City (25.6)
San Diego (24.1)
Portland (24.1)
Denver (23.2)
Austin (21)

Although 57% of Americans believe renting is a waste of money, the average home price nationwide has risen 39% more than the average rent over the past five years and 72% faster in the past year.

Read the full report at: https://listwithclever.com/research/price-to-rent-ratio-2024/

About Clever Real Estate

Clever Real Estate is a technology company that produces educational real estate content reaching over 10 million readers annually, and its nationwide agent matching service has a 5.0-star Trustpilot rating across 2,300+ customer reviews. Since launching in 2017, Clever has reached $8.5 billion in real estate sold, matched 100,000+ customers with realtors, and saved consumers over $160 million on commission fees. Clever's network spans 19,000 agents across all 50 states.

Please contact Nicole Lehman at [email protected] with any questions or to arrange an interview.

CONTACT:
Nicole Lehman
Clever Real Estate
[email protected]
724-719-0406

SOURCE Clever Real Estate