Did you know that there are some cities in the U.S. where home ownership costs far less than renting an apartment? With the country’s high cost of housing and mortgages at the moment, people are having issues with housing as they cannot afford their rent or payments.
Therefore, we have carefully curated a list of 12 wonderful cities that are cheaper to own a home than to rent an apartment in.
U.S. Cities Where Homeownership Costs Less
The 12 cities where homeownership costs less than renting can be found in different parts of the country. However, New York alone has four of them. The first eight are Cleveland, Ohio; Miami, Florida; New Orleans, Louisiana; South Bend, Indiana; Peoria, Illinois; Charleston, South California; Pittsburgh, Pennsylvania; and Chicago, Illinois.
The four cities located in New York are Buffalo, Rochester, New York City, and Syracuse. This might be shocking to some as these cities are quite popular and notably expensive.
High Cost of Housing
For the past couple of years, the country’s housing cost has been very unaffordable to many people. Mortgage rates are around 7%, reducing the number of buyers in the housing market.
However, according to a recent report by Zoocasa, there are 12 hidden gems that many people do not know about that can help you own a house at a very affordable rate in some really good cities.
Zoocasa Survey
Zoocasa is a popular real estate listing website that analyzes market data for over 100 housing markets in the United States. Therefore, the organization carried out a survey comparing the monthly mortgage payments and monthly rental costs for the median single-family home in each market.
This way, there was a standard way to compare monthly rental prices to monthly mortgage payments to see which was more affordable.
ALSO READ: Navigating the High Cost and Mortgage Rates Faced by Prospective and Current Homeowners
How It Was Calculated
Due to the different types of houses available, Zoocasa found a specific way to compare these prices. The company sourced average two-bedroom rental prices from Zumper’s June Rental Report and calculated the mortgage payments using an 8 percent down payment, 30-year amortization, and a 6.78 percent fixed rate.
Then, Zoocasa calculated the differences between the two prices for each city, citing which method of housing was more expensive in each city.
The Biggest Price Gaps
The website survey found that the biggest gap between monthly rent and mortgage payment was in New York, at $781. However, the state also has one of the highest average rates in the country, making it seem less great.
In Chicago, Illinois, the second-biggest difference was $609. The report showed that the average monthly mortgage payment for two bedrooms was $2,091, while monthly rent was $2,700.
Pittsburgh and Syracuse
These two cities typically have low median home prices. Therefore, there is a good margin between the monthly rent and mortgage payments. Zoocasa reported that renting a two-bedroom apartment in Pittsburgh, Pennsylvania, costs $1,550, while the monthly mortgage payment is $310 cheaper at $1,240.
In Syracuse, New York, the situation is similar. The monthly rent is $1,500, while the monthly mortgage payment is $1,190, showing a $310 difference.
Cheaper Monthly Mortgage Payments
The monthly mortgage payments in Peoria, Illinois, and South Bend, Indiana, are usually on the low side at $761 and $1,077, respectively. The monthly rent for a two-bedroom flat in Peoria is $1,050, and that in South Bend is $1,132.
Therefore, it is $289 cheaper to live in Peoria and $55 cheaper to live in South Bend. Both cities are amazing, bubbly cities in which to live, and they have great amenities and opportunities.
Difference Between Rental Prices and Mortgage Payments
These 12 cities can be ranked according to the price difference between their monthly rent and mortgage payments, highlighting which cities are cheaper for those interested. The top 5 cities are New York, NY, $781; Chicago, IL, $609; Pittsburgh, PA, $310; Syracuse, NY, $310; and Peoria, IL, $289.
The rest are Rochester, NY: $229; Miami, FL: $109; Cleveland, OH: $101; Charleston, SC: $78; Buffalo, NY: $75; South Bend, IN: $55; and New Orleans, LA: $48.
ALSO READ: Demystifying the Current State of the US Housing Market
Housing Is Still Widely Unaffordable
Buying a house in these 12 cities is cheaper than renting, but it is important to note that housing in the country is still quite expensive. According to data from Redfin, published in June, the median sale price of a house in the U.S. was $442,451.
This is a 4% increase from June last year. Mortgage rates have increased drastically in many other places across the country, and buyers cannot afford such highly-priced homes.
Average Rent in U.S. Cities
Data from RentCafe shows that the average monthly rent for an apartment in the country is currently $1,713. This is the price for an average apartment size of 899 square feet.
According to the real estate site, three states have the most affordable rent in the country: Oklahoma, at $1,001 per month; Arkansas, at $1,067 per month; and North Dakota, at $1,048 per month.
Is It Cheaper to Rent Than To Own in Nearly Every City in the US?
Yes, renting a home is cheaper than owning one in almost every city in the U.S. right now. According to a recent study by Bankrate, this is the current state of the housing market. The typical rent is $1,979 monthly, while monthly mortgage payments are $2,703.
Therefore, that’s a difference of almost $8,600 a year and $725 every month. This shows that it is much more affordable to rent a home than buy a house in most cities in the country.
Which U.S. City Has the Most Expensive Rent?
According to several reports, New York City has the most expensive rent in the country. A one-bedroom apartment can cost as high as $4,200.
This is thanks to the incredibly high demand for the city, which is a dream city for many. Jersey City in New Jersey and San Francisco, California, follow in second and third place, with rents at $3,300 and $2,950, respectively.
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