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Housing costs comprise the largest monthly expense for most people — and with costs continuing to rise, people are asking themselves: Is it better to rent or buy a home?
There’s no single way to answer the question. It ultimately depends on numerous factors including where you want to live and your personal financial situation.
Here are some factors to consider when deciding between being a renter or becoming a homeowner.
Focus on What You Want
There’s a lot of conventional advice related to buying and renting. But when deciding which is right for you, it’s best to ignore the common wisdom and what others say you “should” do.
Rather, focus on what you want. Do you plan to move somewhere new? Do you hope to start a family? The answers to these types of questions will help you make the choice that’s right for you.
Consider Your Lifestyle
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Some see renting as a waste of money because it doesn’t build equity like homeownership. However, depending on your lifestyle, renting may make sense.
For example, if you need to save for a down payment, you still likely have to rent in the meantime. Or if you prefer not to be responsible for upkeep and maintenance of a property, renting may be the better option.
Assess Your Financial Situation
Two more major factors to consider in deciding whether to buy a home or rent? Dollars and cents.
Getting your finances in order should always be a first step, especially if you are hoping to purchase a home.
If you’re not sure where to start, consider one of the numerous rent vs. buy calculators available, including this one from NerdWallet or the New York Times. Calculators can provide you with a good base to help you understand your current financial situation.
Other financially related questions to ask yourself include:
- Are you secure in your job?
- How’s your credit?
- How much debt do you have?
These answers may not give you a definitive answer, but along with the results from any rent vs. buy calculators, they’ll provide a map for what you need to do to become more financially ready to buy a house.
Where It’s Cheaper to Rent vs. Buy
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In many markets across the country, it’s more affordable to rent than buy. But whether it’s better to buy or rent ultimately depends on where you live.
Realtor.com recently crunched the numbers to identify the cities where renters can save the most money over buying a home.
Austin, TX
Median monthly rent: $1,659
Median monthly cost for buyers: $3,672
Attracting newcomers from across the country, the Texas capital has become a bellwether real estate market in recent years.
Because of its rapid growth, home prices have climbed accordingly. Rising interest rates have further exacerbated Austin home costs, putting a typical starter home at a monthly cost of more than double what it is to rent.
San Francisco
Median monthly rent: $2,943
Median monthly cost for buyers: $5,798
Long one of the country’s costliest cities to buy a home, the monthly cost to purchase a starter home in San Francisco is now nearly $3,000 more than the rental cost of a comparable home.
Seattle
Median monthly rent: $2,059
Median monthly cost for buyers: $3,831
This major tech hub in the Pacific Northwest has experienced the biggest year-over-year increase in monthly homeownership costs over the past year, putting a starter home further out of reach for many residents.
Boston
Median monthly rent: $2,868
Median monthly cost for buyers: $4,965
Home to a large population, top-tier universities and a thriving economy, Boston IS a popular city for renters and buyers alike. But in terms of median monthly costs, it’s more affordable to rent than purchase a home in Boston.
Portland, OR
Median monthly rent: $1,750
Median monthly cost for buyers: $2,996
Significantly cheaper to rent than buy, Portland boasts the most affordable median rent of other cities on Realtor.com’s list, offering a relative bargain for renters looking for a densely populated urban city.
If you’re looking for additional renter-friendly cities, consider these cities where rent won’t break the bank.
Where It’s Cheaper to Buy vs. Rent
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Your homeownership dreams are more easily achieved in markets that aren’t along the Pacific Coast or in a fast-growing part of Texas. Here are the top markets, according to Realtor.com, where homeowners come out ahead of renters in terms of median monthly costs.
Memphis, TN
Median monthly rent: $1,258
Median monthly cost for buyers: $847
Interested in moving to Memphis? Consider buying a home. According to Realtor.com’s analysis, buyers save on average, more than $400 a monthly compared to renters.
Pittsburgh
Median monthly rent: $1,445
Median monthly cost for buyers: $1,097
This former steel industry hub offers a relative bargain for homebuyers — who will save about $350 in monthly costs over renters — as the city has undergone a revitalization in recent years.
Birmingham, AL
Median monthly rent: $1,149
Median monthly cost for buyers: $879
A hub of the American South, Alabama’s capital is another affordable market for homebuyers, with the median monthly cost for a starter home coming in just under $900. That’s compared to renting a home for roughly $250 more per month.
St. Louis
Median monthly rent: $1,211
Median monthly cost for buyers: $1,128
Despite seeing the cost of a starter home climb 34% in the past year, St. Louis remains a slightly more affordable city for homebuyers than renters.
Baltimore
Median monthly rent: $1,749
Median monthly cost for buyers: $1,684
Homebuyers in this Maryland city, not far from Washington, D.C., also come out ahead by just a hair over their renter counterparts, with average monthly savings of $65.
Self-Storage Options for Renters & Home Buyers
A convenient and significantly more affordable alternative to purchasing a home is a self-storage unit. CubeSmart locations near you offer a range of storage options that cost much less than a monthly mortgage.
Regardless of your living situation, self-storage units give you the added room you need. Find a CubeSmart location near you to learn more.
