Of the 50 most populous U.S. metros, it’s cheaper to rent in 46 than to purchase a home. According to Redfin, Detroit, Philadelphia, Cleveland and Houston were the only metros where it was more affordable to buy a home than to rent.
Homes in Detroit were 24% less expensive than renting, followed by Philadelphia at 7%, Cleveland at 4% and Houston at 1%. Across the U.S., homes typically cost 25% more than renting. This data is based on a 6.5% mortgage rate and Redfin’s assumption of a 5% down payment, among other preset information. If mortgage rates drop to 5%, the median mortgage payment would be 10% higher than the median monthly rent, down from the current 24.7%.
“But buying isn’t a feasible option for everyone,” says Taylor Marr, Redfin Deputy Chief Economist, in a release. “Some people move around a lot, so renting might make more sense because they won’t be in their home long enough to build equity. Many others simply don’t have the money for a down payment—a situation that has become increasingly common due to rising mortgage rates and elevated home prices.”
California’s Bay Area was home to some of the most expensive metros for homebuyers. The median mortgage payment in San Jose was $11,049 compared to the median rent payment of $4,176—a 165% swing. San Francisco came in at 139%, while Oakland was at 99%. Anaheim, Calif., was above 90% as well.