Renting Vs. Owning A Home: LendingTree Crunches The Numbers Across The U.S.

Real Estate

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Here are the latest numbers from LendingTree on renting versus owning a home. The report looks at the median monthly cost to rent versus owning a home, with and without a mortgage.

VP, Chief Economist Tendayi Kapfidze crunched the numbers. “The first thing people should consider when doing the renting versus owning calculations are lifestyle choices. Then think about how those fit into your financial goals,” said Kapfidze.

For those still paying a mortgage, LendingTree found across 50 of the country’s largest metros renting on average is $607 cheaper than owning. Of course, with renting you have no equity and no potential return on investment.  When does it make sense to rent rather than own? According to Kapfidz “if you’re only in an area for just a few years renting may make more sense.”  

Here are the numbers on renting versus owning with a mortgage.  In the high-priced cities of New York, San Francisco, and San Jose the difference is considerable. In all three metros, you will spend about $1,200 a month less to rent rather than own if you have a mortgage. The narrowest difference between renting and owning with a mortgage is in Orlando, Tampa, and Indianapolis. In those cities renting only pencils out to an average of a $336 monthly savings.

Here are the top two cities with the widest differences between renting and owning. Looking at the New York calculations, LendingTree took median monthly gross rent of $1,391 (keep in mind that is a median number) and compared that to median monthly housing costs with a mortgage. The difference there is $1,340 with the renter coming out better.

Heading to San Francisco where LendingTree calculated a median monthly gross rent of $1,790. Those with a mortgage had median monthly housing costs of $2,953. Looks like it’s actually better to rent in San Francisco with a difference of $1,163 savings to the renter.

Conversely, if you don’t have a mortgage in high-priced rental markets including San Jose, San Francisco, and San Diego owners do better than renters. They save monthly on average $1,146. It’s not surprising In San Jose, San Francisco and San Diego, the spread in costs between renting and owning a home without a mortgage is the widest. Owners there save an average of $1,146 a month.

Providence, Milwaukee, and Buffalo where rental prices are more affordable owners without a mortgage save an average of $250 a month. Those metros have the narrowest spread between renting and owning. “Depending on where you live in the country it’s important to do that renting versus buying calculation,” Kapfidze advises.

Some homeowners think once the mortgage is paid off, they are home free. That’s not true. You still have significant costs including heating, insurance, taxes, and maintenance.  If you own a condominium add in those monthly HOA costs and high-ticket special assessments. Do remember that renting versus owning is a lifestyle choice above all else.

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