By Sabrina Karl
The average cost to own a home in the 50 largest U.S. metro areas barely ticked up in 2020, while average rents rose considerably more. As a result, it is now cheaper to buy than rent in almost a third of the major markets across the country.
For those following the past year’s housing news, it may seem counterintuitive that the cost to buy remained fairly steady. While it’s true that house prices rose substantially in 2020, mortgage rates meanwhile dropped to historic lows, offsetting the higher home prices with reduced monthly mortgage payments.
The median monthly cost to own a home across all 50 of the largest metro markets inched up to $1,988 in January 2021, just 0.2% above the $1,983 median of a year earlier. Over the same period, the median rent for a two- to four-bedroom apartment across the 50 metros rose 2.4%, from $1,696 in January 2020 to $1,727 this January.
While the nationwide metro cost to own is therefore more than $200 above the average cost to rent, this does not hold up in all of the regions. In 15 of the metros, or 30%, the cost to rent was as much or more as owning. That’s up from 13 such markets a year ago.
In addition, nine more markets registered median home buying costs within just 5% of the average rent.
The five markets where the median cost to own showed the largest discount over renting were Cleveland-Elyria, OH (19% cheaper); Chicago-Naperville-Elgin, IL-IN-WI (14%); Pittsburgh, PA (13%); Riverside-San Bernardino-Ontario, CA (12%); and Miami-Fort Lauderdale-West Palm Beach, FL (11%).
The full list of 15 metros where owning currently costs less than renting, as well as the top 10 where renting is cheaper, can be found at realtor.com in their most recent “Rent vs. Buy” report.