50 cities showing where rents are surging or dropping compared to home values — and how to determine whether it’s worth buying or renting, according to experts

  • Renting or purchasing a home is a personal decision based on finances and preferences.
  • However, experts share a few numbers that you can crunch to determine the best returns.
  • Over a one-year period, the list of 50 cities compares rent prices to median home sales.

Housing market activity is now at its lowest point in more than a decade. However, home prices continue to rise, according to a November 28 note from CoreLogic’s chief economist, Selma Hepp.

The S&P CoreLogic Case-Shiller Home Price Index is up 6.08% so far this year, and Hepp anticipates that it will continue to rise through the end of the year. Increased mortgage rates will slow but not stop the appreciation in 2024. According to the note, home prices will rise by an average of 3% next year.

High interest rates and rising home prices are discouraging would-be buyers and making homeownership seem like a distant dream for many. According to an April report by Home Bay, 85% of 1,000 US renters still want to buy a house, but 72% believe they will never be able to afford one.

As a result, many people continue to rent, driving up demand for rental property and rent prices. However, whether to rent or buy depends on a person’s personal and financial situation.

According to Suzanne Miller, the founder and president of Empire State Properties, people buy when they want to live in a place long-term, believe in the area, and want the stability of owning their own home. If a buyer can make the down payment and cover the monthly costs, she believes that buying and holding an asset that appreciates makes sense even in a high-interest-rate environment.

Miller only recommends renting when the difference is significant. If the monthly cost of renting is 20% less than the monthly cost of owning a home, it may be comparable. However, this decision should be made after careful consideration. Because you’re not gaining equity from a property, the money you save by renting should be earning a return, similar to interest in a bank, she says.

The table below shows the 50 largest metros by population in order of highest to lowest year-over-year rent changes for October 2023. Rent prices are based on Rent.com listings. Home prices are also shown for each area, with year-over-year changes in the median home sales price based on Redfin data.

Except for a few exceptions, such as Seattle and Dallas, metro areas from both databases are comparable. Rent.com‘s data covers the Seattle-Tacoma-Bellevue metro area, whereas Redfin divides it into two metro areas: Seattle-Bellevue-Everett and Tacoma. Rent.com reports on the Dallas-Fort Worth metro area as a whole, whereas Redfin separates the two.

Metro areaMedian rentRent % change YOYMedian sale pricePrice % change YOYColumbus, OH$1,76417.46%$328,0009.33%Providence, RI$2,82814.35%$449,9008.41%Kansas City, MO$1,6079.47%$315,0005%Jacksonville, FL$1,7789.18%$360,000-1.37%Los Angeles, CA$3,6627.19%$880,0006.67%Buffalo, NY$1,6597.02%$249,4509.77%Indianapolis, IN$1,5776.82%$290,0003.57%New York, NY$4,3386.64%$677,0001.80%Birmingham, AL$1,6166.56%$290,0000.87%Hartford, CT$2,1886.43%NANAMilwaukee, WI$1,7296.40%$291,5006%Phoenix, AZ$2,1556.27%$450,0000%San Jose, CA$3,7355.34%$1,505,00011.48%Boston, MA$3,8014.97%$685,0008.73%San Antonio, TX$1,4604.79%$310,000-3.12%Minneapolis, MN$1,8294.62%$365,0001.42%Detroit, MI$1,6854.46%$180,0000.42%Orlando, FL$2,1704.24%$399,9902.32%Virginia Beach, VA$1,7282.66%$335,0008.06%St. Louis, MO$1,6192.21%$245,0003.38%Washington, DC$2,6831.52%$527,0001.55%San Diego, CA$3,4211.48%$865,0009.49%Atlanta, GA$2,0141.17%$390,0005.41%Richmond, VA$1,7551.15%$368,7505.37%Cincinnati, OH$1,6350.60%$275,00010.04%San Francisco, CA$3,6780.38%$1,513,5002.09%Philadelphia, PA$2,342−0.10%$265,0003.52%Tampa, FL$2,099−0.78%$370,000-1.42%Seattle, WA$2,925−0.83%$773,4751.41%Denver, CO$2,702−1.08%$575,0000.88%Riverside, CA$2,685−1.57%$550,0003%Cleveland, OH$1,475−1.76%$210,0005%Baltimore, MD$1,971−1.87%$362,0006.47%Pittsburgh, PA$1,841−1.90%$220,0002.33%Charlotte, NC$1,864−2.90%$414,515-0.14%New Orleans, LA$1,644−3.02%$270,000-3.57%Nashville, TN$1,989−3.59%$448,9100.88%Dallas, TX$2,006−4.18%$420,0000%Memphis, TN$1,484−5.13%$272,500-0.18%Raleigh, NC$1,945−5.33%$435,0001.16%Louisville/Jefferson County, KY$1,298−5.34%$254,000-0.39%Houston, TX$1,637−5.51%$329,700-0.09%Salt Lake City, UT$1,810−6.29%$512,000-0.56%Miami, FL$2,928−6.75%$515,0008.36%Chicago, IL$2,286−7.06%$315,0005%Oklahoma City, OK$1,188−8.67%$247,0000.10%Sacramento, CA$2,586−8.91%$578,0007.04%Las Vegas, NV$1,650−9.61%$420,0002.44%Portland, OR$2,303−9.90%$535,000-0.93%Austin, TX$1,948−10.91%$444,000-6.53%

Dynamic variables must be considered when comparing the cost of homeownership to the cost of renting.

On Tuesday, for example, the average 30-year fixed mortgage rate was 6.90%. The average down payment for first-time home buyers in the United States is 8%. Taking these variables into account, a downpayment of about $54,200 on a home in New York City with a median sale price of $677,000 would result in monthly payments of more than $5,754 after adding private mortgage insurance, taxes, and homeowners association fees, according to a mortgage calculator. This is in comparison to the city’s median rent of $4,338 per month, which is 25% less.

According to Shmuel Shayowitz, president and chief lending officer at Approved Funding, owning a home often costs more than renting. However, if you look at it from a purely economic standpoint, you can draw some comparisons that will demonstrate the benefits of homeownership, he added.

Consider the cost of rent over a five-year period: $3,000 x 12 months = $36,000 annually. If you multiply that by five years, you’ll end up paying $180,000 in rent. According to Shayowitz, this figure does not include any potential rent increases.

Then you weigh it against the cost of ownership. Assume a monthly mortgage payment of $4,000 divided by 12 months equals $48,000 divided by 5 years equals $240,000. These figures do not include additional costs such as home insurance, taxes, and homeowners association fees, but the total is clearly higher, he said.

However, if you consider the principal you put into your home, which on this house would be approximately $20,000 plus, and assume the home appreciates at a rate of 4% per year, which would be about $16,000 per year, it would amount to $80,000 in home appreciation over five years. Add in the tax benefits from mortgage interest and property tax deductions, which vary by state and income bracket, and you’ll be well ahead in terms of net worth, he says.

According to Shayowitz, owning a home is comparable to being forced to save. So, if you’re on a tight budget, you must be willing to cut back on spending, which may alter your lifestyle.

Certified financial planner Nadine Burns takes a more straightforward approach. If you pay rent, it should not exceed 20% of your gross income. This will give you time to save money for a downpayment on a house. However, if you already own your home, you have a little more leeway in your spending. The total cost of your housing, including mortgage, taxes, homeowners insurance, and utilities, should not exceed 30% of your gross income.

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