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.

cheaper to own than rent redfin
In most US cities, renting tends to be far more affordable than buying — the Philly area is an exception.
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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.