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GOBankingRates
The Cost Difference Between Renting and Buying in America’s Largest Cities
By Caitlyn Moorhead,
2024-07-26
One of the biggest financial decisions you will ever make is whether or not to purchase a home. The implications of this potential money move are only compounded if you find yourself in a larger city where the housing market is competitive and the cost of living is steep. With high interest rates on monthly mortgage payments, buying a house might seem out of the realm of possibility, but the upfront costs of a down payment would save you thousands of dollars when it comes to the true lifelong cost of renting.
Long-term housing costs of your real estate, whether you are spending on monthly rent or building equity, tend to add up either way, but your decision to rent or buy could make the difference in achieving your savings goals. Paying property taxes and the concept of home equity may sound overwhelming, but when it comes down to the brass tacks benefits, what is really better for your buck?
GOBankingRates recently conducted economic research to determine the cost difference in home prices between renting and buying in some of the largest U.S. cities and metro areas. Here are a few key findings from 15 of the largest American cities .
Methodology: GOBankingRates found the average cost of living for homeowners and renters in the USA’s largest 100 cities by population. First, GOBankingRates found the top 100 cities by population as sourced from the U.S. Census American Community Survey. For each city, several factors were found, including total population, total households and household median income all sourced from the U.S. Census American Community Survey. The cost of living indexes was sourced from Sperling’s BestPlaces, and the national average expenditure costs for all residents were used, as sourced from the Bureau of Labor Statistics Consumer Expenditure Survey for all residents. The single-family home value was sourced from the Zillow Home Value Index and by assuming a 10% down payment and using the national average 30-year fixed mortgage rate as sourced from the Federal Reserve Economic Data, the average mortgage rate can be calculated. The average rental cost was sourced from the Zillow Observed Rental Index for each city. The average rent cost and average mortgage cost can be used with the average expenditure cost to calculate the total cost of living for renters and homeowners. The cities were ranked to show the cheapest to most expensive cities and then sorted by total population to show the cost of living for homeowners and renters in the top 100 cities by population. All data was collected on and is up to date as of July 15, 2024.
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