Rent or Buy? It Depends Where You Live
December 5, 2017
The perennial debate on whether it is more cost-effective to be a homeowner or a renter is the subject of a new study from the Urban Institute’s Housing Finance Policy Center, which analyzed 33 major metro areas. The result of the analysis found that in was, on average cheaper to own than rent in 17 markets, while in 16 the renters were at a financial advantage.
In the areas where homeownership was more advantageous, the Urban Institute cited down payment assistance programs in helping families achieve homeownership, especially in more expensive markets. Miami was cited as having the largest rent gap in the country, where the median borrower would save 11 percent of their income if they purchased a median-priced home with 3.5 percent down. However, that doesn’t mean Miami is a cheap place to buy: the city ranks 11th in mortgage affordability nationally, with a median mortgage payment that absorbs 32 percent of the median income.
On the other side of the spectrum, San Francisco was named the most expensive city for homeownership thanks to monthly mortgage payments on a median-priced house with 3.5 percent down eating up 80 percent of the median borrower’s income. West Coast markets, particularly California’s big cities, dominated the list of areas where renting was cheaper than buying.
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