Top 18 Cities Where It’s Better to Buy vs. Rent a Home (and Vice Versa)

According to new research from Home Bay, renting a home is more affordable than buying one in 45 (or 90%) of the 50 most populous U.S. metros. 

Since 2016, the average U.S. home price has grown 70% more than the average rent, driving up the cost of homeownership and making a large percentage of renters question whether homeownership will ever be possible for them. 

On average, in those 50 most populated cities, renters save $174 a month on the median rent for their area compared to the median mortgage payment. That adds up to $2,088 per year. 

Home Bay’s analysis & findings

Home Bay’s report analyzed these metros based on their home price-to-rent ratios, calculated by dividing each market’s median home prices by their median annual rents, to identify those where the transition to homeownership is most affordable for renters. 

A price-to-rent ratio of 15 or lower means it’s better (i.e., ultimately more affordable) to buy a home, while a ratio of 21 or higher means it’s better to rent. The national average is 18. 

In some metros, renters save a massive amount each month just by renting instead of paying a mortgage. The study also found that, nationally, the typical home purchase price is equal to 166.3 months of rent—or nearly 14 years. In San Jose, that number rises to 450 months or almost 38 years. 

Top 18 best metros for buying vs. renting

Of the 50 most populous metros, the following 18 had the lowest home price-to-rent ratios—15 or under, compared to the national average ratio of 18—making them the best metros for buying vs. renting. 

1. Pittsburgh, PA: with a price-to-rent ratio of 12
2. New Orleans, LA: 12
3. Chicago, IL: 12
4. Cleveland, OH: 12
5. Memphis, TN: 13
6. Miami, FL: 13
7. Detroit, MI: 14
8. Oklahoma City, OK: 14
9. St. Louis, MO: 14
10. Tampa, FL: 14
11. Cincinnati, OH: 15
12. Birmingham, AL: 15
13. Philadelphia, PA: 15
14. Indianapolis, IN: 15
15. Houston, TX: 15
16. New York, NY: 15
17. Louisville, KY: 15
18. Atlanta, GA: 15

Pittsburgh, PA, while tied with New Orleans, Chicago, and Cleveland for the lowest home price-to-rent ratio (12), also has the lowest home prices (at $188,419) of all the cities in Home Bay’s study, making it the best city on the list for home buyers. 

New York City, with a price-to-rent ratio of 15, has the highest home prices (at $599,117), but since the typical rent is $3,068 a month, NYC residents are better off buying than renting. 

Of the four major U.S. regions, the South has a well-earned reputation for being the most affordable. And based on the home price-to-rent ratios revealed in the study, that’s still true. Fully half of the 18 best cities for buying vs. renting are in the South: 

• New Orleans
• Memphis
• Miami
• Oklahoma City
• Tampa
• Birmingham
• Houston
• Louisville
• Atlanta

While Miami and Tampa have seen some of the biggest jumps in home prices across the U.S. over the past year, both are still better options for buying vs. renting. With home values at $444,989 and $359,669, respectively, they’re also significantly more affordable than, say, Los Angeles, where the typical home value is $871,775. 

Top 10 metros where the typical rent is cheaper than the typical mortgage payment:

1. San Jose, CA—with a price-to-rent ratio of 38
2. San Francisco, CA: 30
3. Seattle, WA: 26
4. Salt Lake City, UT: 25
5. Los Angeles, CA: 25
6. Denver, CO: 25
7. Portland, OR: 24
8. San Diego, CA: 24
9. Austin, TX: 22
10. Sacramento, CA: 21

Other factors to consider

Comparing monthly mortgage payments to monthly rent is one way to gauge which metros are better for buying versus renting. But that doesn’t take into account other factors like additional housing costs (beyond rent or mortgage payments) or potential increases in a home’s value. 

Interest rates have a huge impact on whether mortgage payments or rent prices are more affordable. If rates fall to 4%, the typical mortgage payment will become cheaper than the typical rent in 30 of those 50 metros. 

Also, in 22 of those metros, rent prices are within 20% of the typical mortgage payment. So, residents in many U.S. cities have a tougher time deciding whether to buy or rent. That said, given the benefits of homeownership vs. renting, the smaller price gap between the two argues for buying. 

Compare that to California, where the gap between monthly mortgage payments and rent is at its widest in three of the most popular metros in the country: 

• Los Angeles ($2,802)
• San Francisco ($4,089)
• San Jose ($6,190) 

So, for instance, in Los Angeles, renters actually spend nearly $3,000 less per month on shelter than those who choose to buy a home. 

At the other end of that spectrum are metros where the typical monthly mortgage payment is less than the typical rent—namely New Orleans, Pittsburgh, Chicago, Cleveland, and Memphis. Buyers save the most in New Orleans, where the typical mortgage payment costs $107 less than the typical rent. 

Read the full report on Home Bay for more details. 

Top takeaways for real estate agents

Buyers and sellers in your local market need to know whether their area favors home buyers and renters. Be aware of current mortgage rates and inventory numbers (at different price points) for your area so you can help buyers and sellers who might be on the fence. 

Using the tools at your disposal, keep your clients and prospects informed of any developments that could affect their ability to buy—or to get the price they want for their home. 

And, in case it needs to be said, get your information from reliable sources, and share those with the people you’re having conversations with.