22 US metros where buying a home is cheaper than renting

Many renters think they save money by renting, but in the long run that may not be true. In some of the largest metro areas in the US, a monthly mortgage payment is cheaper than the average rent. But there are many factors that influence affordability: how do city residents make this decision?

A Zillow Home Loans report published in September outlines some key trends and factors for renters to consider when evaluating a home purchase. Here are some key insights from the report:

New Orleans, Chicago and Pittsburgh offer the biggest savings

If a customer has a 20% down payment and a 30-year fixed mortgage rate, they can expect to save more than $300 in the three largest metros in the report.

• In ChicagoThe average rent payment is $2,074 per month, but a monthly mortgage payment is $1,640 – a savings of almost $434 per month by owning instead of renting.
• In New Orleanshomeowners can also save $446 per month by paying a mortgage instead of renting.
• In Pittsburghthe savings is approximately $321 per month.

Other cities on the list include Miami, Houston and St. Louis. That’s possible view the full list here.

Buying over renting: a trend in the US

The trend for a mortgage payment to be more affordable than rent is true across the US. The typical rent payment nationwide is $2,063 per month, but the typical mortgage payment is $1,827 – a savings of $236 per month by owning instead of renting.

The report provides context: Rent growth has fallen from pandemic-era highs and returned to long-term norms, but prices are still rising. The average rent is 3.4% more expensive than a year ago and almost 34% more expensive than before the pandemic. The for-sale market, on the other hand, offers opportunities for buyers heading into the fall, with more than 1 in 4 sellers cutting prices. With inventory up 22% from a year ago, buyers are gaining bargaining power.

And according to Orphe Divounguy, senior economist at Zillow Home Loans, homeownership may be more within reach than most renters think. “Coming up with the down payment is still a huge barrier, but for those who can make it work, home ownership can come with lower monthly costs and the opportunity to build long-term wealth in the form of excess value – something you lose on. as a tenant,” says Divounguy.

Need help with advice about renting versus buying? To consider the pros and cons of each.

Track affordability over time

With rents rising and the sales market softening, including a rise in inventory, now is a great time to help home buyers understand their affordability. Zillow Home Loans Purchasability tool is a great way to get that conversation started. With just a few inputs, potential homebuyers can get an idea of ​​how much they can afford, and their likelihood of being pre-approved for a mortgage. Buyers can check their BuyAbility regularly in the Home Loans tab in the Zillow app to see how their estimate changes with current mortgage rates or a change in their credit score.

“With mortgage rates falling, now is a good time to see how your affordability has changed and whether it makes more sense to buy rather than rent,” Divounguy said.