Top 10 Cities Where Owning Is Cheaper Than Renting

As home prices continue to stagnate in many markets across the country, renters are facing some tough choices: should they take advantage of low prices and make the move into home ownership, or wait a while longer, on the chance that the market hasn’t yet hit bottom? In some cities, the choice is easier: prices have fallen so much that it’s cheaper to buy than it is to rent.

Trulia ran the numbers recently, and came up with some helpful answers, which Mint.com turned into a snazzy infographic:

Real estate listing website Trulia.com recently released its new Buy vs Rent index, ranking the top 10 cities in the United States where buying makes most sense, as well as the top 10 cities where you should rent. How did they decide? With the help of the so-called buy/ rent ratio, which is basically the average price of a home in an area divided by the average rent charged per year. If the result is 15 or lower, that means homes in that area are priced so low that buying is cheaper than renting. If the buy/ rent ratio is 20 or higher, the case is stronger for being a renter.

Ultimately, of course, the decision to buy or rent should be based on much more than plain numbers and statistics. Homeownership enables you to build equity over the long term, but comes with costs beyond a home’s purchase price (such as property taxes and maintenance, the broker commissions and other costs associated with selling that home) that require a committment of at least five or six years to be recouped. You build no equity by renting, on the other hand, but you have the freedom to move at a month’s notice. The debate could go on and on.

Based on the data, if you’re in Minneapolis, Miami or Fresno, you should get out of that rental and buy something. In Dallas, San Diego and New York, however, renters still have the edge — especially in New York, where Trulia puts the average listing price for homes at $1.4 million, while rentals run about $3,500.

Top 10 Cities to Buy vs Rent (Infographic)

Comments

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  1. gman863 says:

    Trulia.com lets you check the actual prices of homes that recently sold in your zip code.

    My subdivision was a shock: A crappy looking forclosure sold for under 50K; a nicer home around the corner (and only a few hundred square feet larger) sold for 120K.

    Go figure.

    • stuporglue says:

      For some values of recently. We closed last May and Trulia still doesn’t have our info on the site.

    • chemmy says:

      Wait do you live in my subdivision? Same exact story… except the foreclosure was a HUD house and beat all to hell……

      • stuporglue says:

        Probably not in your subdivision, but ours was also a foreclosure…maybe that’s the factor.

  2. humphrmi says:

    Fresno? Nobody goes to Fresno anymore…

    • djlotus says:

      I don’t think anybody ever went there anyway. People kinda just end up there.

      • areaman says:

        LOL That’s so funny because it’s true.

        I’m noticing more and more the differences in people who participate in their lives vs people who don’t.

        Fresno seems like a place full of the people who don’t participate.

      • jake.valentine says:

        “I don’t think anybody ever went there anyway. People kinda just end up there.”

        Not too different than New Jersey. If you go there its because you have to, not because you want to.

    • yankinwaoz says:

      Anyone remember this?

      The first Spanish explorers of California are camped where Fresno now resides.

      Foot solider to commander: “Sir… taste this grape I found growing here!”
      Commander: eats grape and his face twists into a grimace. He spits out of the grape in disgust.
      Commander: “What the hell is that? It taste like…… Fresno!”.

    • humphrmi says:

      Boy, did this conversation not go the way I expected.

      Don’t get me wrong, this has been an interesting discussion, but I was really hoping that *someone* would pick up the Airplane! / Stephen Stucker reference.

      Sigh. Carry on.

  3. tkmluv says:

    Well, that makes sense for me. I live in Las Vegas and was paying $1350/month for a 1600 sq/ft house. We purchased a home 6 months ago and adding in taxes, HOA and everything else, we are only paying $1150 for a 1800 sq/ft house in a better neighborhood. Go figure.

    • Beeker26 says:

      Vegas has the 2nd highest foreclosure rate in the country, and real estate prices are ridiculously low now.

      • tkmluv says:

        That is why we jumped. The house we got is 20 years old but was selling for almost 450k at the boom and was 250k when new. We were able to get it for 165k.

    • dangerp says:

      Good job! I just went from paying $800 rent to $420 mortgage payment. Even after taxes, interest, and PMI I’m in the clear by at least $160/month. All that and we went from a 1 bed duplex to a 3 bedroom house!

      I’m in Sacramento, if anyone cares.

  4. trujunglist says:

    Mesa isn’t really a city, it’s a suburb.

    • Admiral Byrd says:

      You should let the City of Mesa know.

    • jake.valentine says:

      Arlington seems to be more a suburb of Dallas/Ft. Worth than an actual city. I think they are using the term city loosely. Strictly speaking they are cities, but in perception they are just large suburbs. I would love to relocate to Arlington from California if I could transfer there and escape Cali’s ridiculous taxes.

  5. 89macrunner says:

    this is very true in PHX.. the townhouse im renting right now is a good few hundred dollars cheaper than what the mortgage would cost me.

  6. izl says:

    I live in El Paso, and I saved $300 a month by buying a house. My rent was $1000/mo for a 3BR apartment, now I have a 3BR house for about $700/mo. I moved down in neighborhood, but we still live in the 2nd safest large city in the country, so that really didn’t matter much.

  7. thewildboo says:

    I’m near New Haven, CT, and the market has just tipped enough that we’re buying a house. Our rent was getting jacked up and home prices had just fallen again, so it was a pretty easy decision. We’ll be paying just about the same monthly outlay for mortgage/taxes/insurance combined as we would be for rent, except now at least the majority of that money isn’t going down the toilet.

    • eccsame says:

      until the toilet breaks, of course. When that happens, tell the plumber how much money you’re saving.

      • JulesNoctambule says:

        Because when you rent, anything that breaks is fixed immediately and your landlord never hikes the rent to make up for it! That’s why my neighbour didn’t go three weeks without water waiting for the rental company to approve maintenance to show up and fix a pipe at our old apartment complex.

        • Powerlurker says:

          In most jurisdictions, nonfunctional water would violate habitability clauses in your lease and be one of the very few things you could either legitimately withhold rent for or even fix it yourself and deduct the cost from your rent.

  8. veritybrown says:

    I’ve never lived *anywhere* where it was cheaper to rent. The biggest problem with buying is coming up with a down payment. Also, you have to be prepared to fix anything that breaks. I can see renting for convenience’ sake, but where in this country is the month-to-month cost of renting cheaper than buying?

    • Jevia says:

      I have to agree, especially if you count room for room, sq footage for sq. footage.

    • shepd says:

      Have you considered all the costs of ownership that you never get back?

      For many, that means condo fees ($3,000 a year is pretty normal), taxes ($2,000 a year in many places), repairs (which you mentioned, I would put away $2,000 a year for that–think about major things like replacing the roof every 15 to 20 years, etc), mortgage costs (Let’s be REALLY generous and put that at $2,000 a year).

      That’s $9,000 right there that you get no benefit from, which you will never get back. In my city, you can rent for that much alone.

    • sponica says:

      When I was living in a 3 bedroom in Park Slope Brooklyn, paying 1/3 of the 2700 rent (which included a monthly visit from the exterminator, heat, and hot water) I’m fairly certain it was cheaper than buying an equivalently sized 3 bedroom. Or at least much more manageable than buying a 3 bedroom of the same size in the same neighborhood, the same distance from a subway stop…

    • lettucefactory says:

      Trulia has a list for that, too: http://www.trulia.com/blog/rudy_bachraty/2010/06/new_trulia_real_estate_index_rent_vs_buy

      NYC is, unsurprisingly, at the top.

      I am in the DC area and houses in my neighborhood start at $500K. The mortgage on that, even assuming 20% down, would be way more than what I currently pay to rent someone else’s house. I don’t love renting and I wish I could buy, but it would certainly not be cheaper to do so.

  9. tournant says:

    Oh look, 10 cities you couldn’t pay me to live in.

  10. Roadkilled says:

    Wait a second. The average rent in Minneapolis is $1700? REALLY?

    I live in Minneapolis and I have a TON of trouble believing this can be real. Among my friends (recent grads, so cheap living) I pay more rent than most, and I’m not even paying near half of $1700.

    I wonder, is this talking about renting an entire house vs. buying one or something?

    • Kuchen says:

      Yeah, I don’t pay anywhere near $1700 in Minneapolis, either. It just says “average” for both numbers, so I wonder if the home price is the median and the rent price is the mean.

    • MsFab says:

      I think its true depending on where you are. I just moved back to Minneapolis a few months ago, and rents in downtown, Uptown and even St Louis Park were astronomical. A lot of the new condo buildings are now renting, so the rents are super high because of the new construction in those high-rise buildings.

    • stuporglue says:

      My sister and brother-in-law and their two kids just rented a 50s rambler 2bed/office/1 bath/partially finished basement/fenced in back yard for $1000/month in or near Vadnais Heights (Minneapolis suburbs). Nice place.

      We pay $850/month on our mortgage on a similar 50s rambler in Fridley, which is only 15 minutes from their place.

    • erratapage says:

      I agree there is something really wonky about the Minneapolis statistics. The listing price looks lower than my experience. It must just reflect urban houses, and must be skewed to reflect the collapse of the north Minneapolis real estate market.

  11. StutiCebriones says:

    Yeah, except it’s apples and oranges because all of those “costs beyond a home’s purchase price”; they’re built into rent but excluded from the homeownership costs. If sites like Trulia and Mint aren’t able to figure that out, maybe Consumerist can pull ahead of them and do it for them?

  12. Skankingmike says:

    You know in the end it doesn’t matter what you save.

    We bought a house because we own a dog. I tried to rent with a dog but the land lords are annoying, the tennats that don’t have pets get annoyed and the landlords who dont’ care about you owning a dog, often dont’ care about other things as well.

    I got so sick of renting (everything from multi units, to a house to an appartment complex) we had to jump at the chance to own a home at a super low FIXED intrest rate.

    All these sites talk about are hard numbers. Sometimes the largest cost ratio is happiness or peace of mind. My peace of mind comes from not worrying about my landlord harrasing me about my dog. That I can rescue more dogs if I want and have a safe fenced in yard to keep them in.

    My life is more fulfilled even if I just remolded 3 rooms of my house due to neglect(and have a ton more projects). I’m stil happier at the end of the day that things in the house I can actually change and i’m not stuck with the same thing until I move out.

  13. blinky says:

    Remember you may have to sell it.

  14. Ragman says:

    You can live in Arlington in a cheaper house and work in Dallas for the higher wages.

  15. semanticantics says:

    My best friends own a handful of rental properties in MPLS. They cannot wait to sell off after 10+ years of struggle to make it an income producer. I had told them about this story before it was posted here, and they rolled their eyes. The one friend constantly advises me not to buy something. His sister just bought and is already regretting it.

    Mpls avg. of $1700 / mo isn’t a studio vs. a 3 bedroom home, I’m sure it’s apples to apples.

  16. BurtReynolds says:

    I’ve looked into moving to San Antonio, mostly because for the price of our townhouse in the DC area, I can have the nicest house on the block in a gated community. “Rush hour” meant slowing down only when there was an accident on the highway. After spending 45 minutes going about 10 miles on 395 last night, I think I need to do another scan of some company websites for jobs.

    If the price isn’t historically high, and you plan on staying there for a while, I wouldn’t be afraid to buy even if renting might be a bit cheaper short term.

  17. Minneapolis says:

    Hmm… I still rent.

  18. Bativac says:

    I’m in Jacksonville and the average rent must be for a 2 bedroom apartment. All the rental homes I was looking into were between $900 and $1300/mo. That and a desire to mold my home into something I really wanted to live in are why I bought a house last year. I have not regretted the decision for an instant (though saving the down payment for the previous 3 years and then “giving it away” sure was stressful).

  19. chargerRT says:

    I’m a Jacksonville homeowner, and since at least 6 years ago (when I entered the home buying frenzy with everyone else), buying has generally been cheaper than renting for comparable square footage and part of town. And from what friends have told me–who still rent for various reasons–it still is true.

    And considering that some units in a condo conversion near me are going for as low as $30k, it’s definitely true!

  20. NarcolepticGirl says:

    Well, here’s why I still rent:

    I get bored of living in the same place after a year or so. I think the longest place I lived at while an adult was 2 years. I also don’t have the credit to buy a house.

    I also don’t want to deal with buying appliances and a house full of furniture. I don’t like sleeping on a ground level floor (creeps me out). I don’t know how to fix anything. I don’t have a giant savings account for anyone else to fix anything. I imagine electricity would be more expensive, I don’t like mowing lawns. shoveling snow, I also don’t feel like paying for a bunch of seperate things like property taxes, home insurance, mortgage, pest control, landscaping, water/sewer, etc
    And I don’t want a place big enough that anyone can guilt trip me into moving in (family).

  21. HogwartsProfessor says:

    I bought because I couldn’t afford a higher rent. The mortage payment for a whole house is cheaper than rent on a slightly larger apartment than the one I was living in. Granted, it’s a very small house, but I have a yard and I don’t have to listen to people through the wall anymore. Of course, now if I want to move, I have to sell the stupid thing. Sometimes I just want to light a match.

    I would still have lived in apartments if they would just SOUNDPROOF the damn things.

    • jake.valentine says:

      “I would still have lived in apartments if they would just SOUNDPROOF the damn things. “

      Truer words have never been spoken. I’d only add that apartments should use common sense when screening tenants. If you put loud college students living on their own for the first time in the middle of a group of professional/family occupied apartments, then the they will move out. My last apartment manager asked me why about 5 adjacent apartments were all moving out within a few months of each other and was surprised to learn it was all because of 1 apartment. To me it was a no brainer that she should have seen coming.

  22. Awesome McAwesomeness says:

    Except that they don’t figure in upkeep costs like a new roof, a/c, fence, hot water heater, plumbing or electrical problems, foundation problems, landscaping, updates, etc… Plus, houses take more time and energy to keep up, utilites are generally higher, and in the long run, you pay close to what you paid for the house in interest alone.

    I live in an area with low housing costs. We had a nice home that we got a great deal on. It was in decent shape when we got it, yet over 8 years, we spent a ton of money upkeeping it. We had quite a bit of equity, but once we deducted the real estate fee and upkeep, we came out behind.

    I am not against homeownership (except for my husband and I), I just think that people need to make sure they aren’t kidding themselves and consider all of the real costs associated with owning a home. Even if you pay it off, but then, it will be older, outdated, etc…and not as desirable to buyers as when it was originally purchased.

  23. moonjest says:

    “…but you have the freedom to move at a month’s notice.”

    I live in the Denver area, and this is becoming less true for places that require a lease.

    If I break my lease, I have to pay back all my concessions (b/c there is this scam to set the “market value” of apartments at a ridiculously high value then give you a concession of $200-$300) and pay at least two months worth in rent. All together, this amounts to thousands of dollars. Plus my apartment complex requires a 60 day move out notice.

    Another peeve is all these apartment complexes that label themselves “pet friendly” and charge both a non-refundable ($200) and refundable (another $200) pet fee plus monthly pet rent ($25/mo). This is not pet friendly; this is exploitation. Additional rent isn’t charged for a second or third occupant, why should it be for a pet? (No, my cat does not pee on the carpet nor tear it up.)

    • Skankingmike says:

      see my comment about pet owning and renting.

      I told my future wife about a million times that you cannot rent and own a pet and expect to have no issues or headaches. Against my better judgment I caved and rented 2 family home bottom floor and ended up having one of the worst 6 months of my life.

      First off most rescue places won’t allow people who rent to adopt. Others screen you and your land lord.

      And even if you don’t’ go that route if you just get an animal say a dog, you often find that the “nice” places or apt complexes charge tons more money say 2000 dollars (in my area) by the time you’re done with all these added fees for “pet friendly” then you have almost no place to walk your dog, cat’s a different story perhaps why most places allow cats not dogs.

      Personally if i was a land lord I’d rather a 10 dogs than 1 cat. Issue? Cat piss. Ever go to a house were a cat pissed on the carpet or a hard wood floor? A say good bye to your hardwood and B that smell is there indefinitely

      I degress,

      I would’ve loved to rent for the next 3 years, but there was a few factors that swayed me.

      1. We have a pet
      2. low fix interest rates
      3. low home prices
      4. sick of land lords.

      • Verdant Pine Trees says:

        The smell doesn’t have to be there indefinitely, if it’s taken care of right away. Trust me, I know. And dogs … well, my mother knew someone who bought a house without checking out the basement. Apparently, instead of letting the dogs crap outside in the cold Michigan winter, they’d have them take dumps in the basement. And They Never Cleaned Up. Now that smell wasn’t coming out.

  24. Beeker26 says:

    On a related note, if you’re in an area that has been hit hard by foreclosures it’s very likely that rental rates have also gone down. If your landlord refuses to renegotiate your rent based upon current rates you could easily save $100 a month or more if you move into another unit.

  25. smo0 says:

    My neighborhood is weird, 30k homes on one street and 3mil homes on the next….

  26. Tom Foolery says:

    What is this “equity” of which you speak?