Renting or Buying Home: Generally speaking, if you reside in a big city, renting is preferable to buying a house, according to the financial goods comparison website Bankrate.
Across all 50 of the largest metro statistical areas (MSA), renting is 37% less expensive per month than purchasing a median home, according to Bankrate. According to USAToday In the United States, the average monthly rent was $1,979 as of February, while the average monthly mortgage payment for a median-priced home was $2,703.
Because the cost of renting a home is so much less than that of buying one, Americans who are already struggling financially can feel secure in their decision to rent at this time, according to Bankrate Analyst Alex Gailey.
“In most major U.S. cities, renting appears to be the most cost-effective option for those considering their options right now,” according to Gailey.
Where do purchasing and renting differ the most?
The average monthly cost of ownership is at least 50% more than the average monthly cost of renting in 21 of the 50 largest U.S. metro areas. According to Bankrate, the West, where living expenses are typically higher, contains four of the top five metro areas with the biggest gaps.
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- In San Francisco, Oakland, and Berkeley, California, the average monthly mortgage payment is $8,539, resulting in a 180.7% difference between rent and mortgage payments of $3,024.
- Rent in San Jose, Sunnyvale, and Santa Clara, California, is about $3,255 per month, but mortgage payments are $8,539, resulting in a 162.3% difference.
- In Seattle, Tacoma, and Bellevue, Washington, the average monthly rent is $2,191, which is 125% less than the $4,930 monthly mortgage payment.
- Salt Lake City, Utah: An average monthly rent of $1,673 is 89% less than the $3,161 typical mortgage payment.
- Austin, Round Rock, Georgetown, Texas: The average monthly rent is $1,753, but the average monthly mortgage payment is $3,269, representing an 86.5% difference.
Where do purchasing and renting differ the least?
The least discrepancies were seen in the Northeast and Midwest, where costs of living are often lower; but, according to Bankrate, renting was still less expensive than buying.
Detroit, Warren, and Dearborn, Michigan: The average monthly rent is $1,395; this is just 2% less than the $1,423 mortgage payment.
- Pittsburgh: The average monthly rent is $1,415, whereas the average monthly mortgage payment is $1,488. This is a 5.1% difference.
- Philadelphia, Camden, Wilmington, Pennsylvania, New Jersey, Delaware, and Maryland: The average monthly mortgage payment is $1,988, which is 8.7% more than the monthly rent of $1,829 in these areas.
- Cleveland-Elyria, Ohio has an average monthly rent of $1,377 and a mortgage payment of $1,537, representing an 11.6% difference.
- The average monthly rent in Buffalo-Cheektowaga, New York, is $1,295—a 20.2% decrease from the average monthly mortgage payment of $1,556.Ignoring upkeep
When it comes to physical structures, little issues inevitably turn into major ones given enough time, and letting a problem fester is one of the least effective ways to spend a year.
“Your home’s value can be quickly diminished if you neglect to address necessary repairs and maintenance issues,” Dotoli advised. This include neglecting leaks, broken roofs, electrical or plumbing troubles. Over time, neglecting maintenance might result in more serious and expensive issues.
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So, should I be Renting or Buying a Home?
Depending on your financial circumstances, yes.
42% of Americans, according to a new Bankrate survey, think that this is a bad time to buy a property.
“You should set aside your FOMO and continue renting if you can’t afford a home in this market,” Gailey advised. Utilize the time “to continue saving, pay off debt, and build wealth through other means, such as investing in the stock market through a retirement account.”
When you can afford to buy a home is the ideal moment to do so.
It can be riskier to time the housing market if you’re financially prepared to purchase a home, meaning you have a down payment saved up, little to no debt, and a fully funded emergency fund, according to Gailey. “You ought to wed the house and date the rate.” In a year or two, when interest rates are lower, you can always refinance.
