In these US cities, it’s cheaper to buy a home than to rent
Four cities in the US offer more affordable homeownership than renting, according to a new analysis by real estate brokerage Redfin. Detroit comes out on top, with the typical home 24% less expensive to purchase than to rent. Philadelphia follows with a 7% discount, followed by Cleveland (4%) and Houston (1%). Mortgage payments are less than rents in these cities, whereas in most other parts of the US homes cost 25% more to buy than rent. However, Redfin warns that the lower house prices are partly due to stagnation in these markets, meaning buyers should expect to build less equity than in more thriving real estate markets.
FAQs:
Which cities offer more affordable homeownership than renting?
Detroit, Philadelphia, Cleveland and Houston.
Are mortgage payments less than rents in these cities?
Yes, in all four cities listed.
Why are house prices lower in these cities?
It is partly due to stagnation in these markets.
Should buyers in these cities expect to build less equity?
Yes, buyers can expect to build less equity than in more thriving real estate markets.
Buying a Home is More Affordable Than Renting in These American Cities
Becoming a landlord more affordable than paying a landlord in select US cities
A recent analysis by real estate brokerage Redfin has found that in fewer than five of the most populous US metros, purchasing a home is a cheaper alternative to renting. The analysis recorded that across the country, owning a home is less achievable than paying rent, except in select cities, which include Detroit, Philadelphia, Cleveland, and Houston. In these four metro areas, researchers found that mortgage payments are less than rent, a rarity in the US market, where the cost of buying a home is 25% more than rent. Redfin’s deputy chief economist Taylor Marr said to the Philadelphia Inquirer about the analysis, “It was almost surprising there were any places” where buying was cheaper than renting. “Higher interest rates really changes the equation with owning and renting,” he added.
Redfin found buying in Detroit is the most affordable when compared to renting, as the typical home is 24% less expensive to purchase than to rent. Philadelphia follows in second place, offering a 7% comparative discount. Cleveland ranks third, providing a 4% discount, and Houston falls in last place, with a 1% advantage for homeownership over renting. Although purchasing property may be more accessible in these cities, Redfin notes that the affordability also comes with a potential drawback. The lower home values in these areas are partly due to the sluggish nature of the property market compared to cities experiencing a pandemic-driven boom, such as Phoenix and Miami. Therefore, while it may be less expensive to buy a home in Cleveland or Houston, buyers should expect to build equity more slowly than if they bought in a more dynamic market.