Rent vs. Buy: Here’s How Much More a Single-Family Home Costs To Buy Than Rent

by Julie Gerstein

Rental prices have fallen for the 15th straight month—so, naturally, it makes more sense to rent instead of buy, right?

It’s not that simple.

Right now, it’s more affordable to rent than buy in all 50 of the major metro areas, according to the Realtor.com® October 2024 Rental Report. The median asking rent in these metros was $1,720, down $23 from last month and $40 from its August 2022 peak.

Meanwhile, with a median home listing price of $425,950, a monthly mortgage payment would set the average homebuyer back $2,229—around 30% more than the median rental price. That’s assuming a 20% down payment and a 6.93% interest rate. It doesn’t include property taxes or insurance.

So it makes sense to rent, right? Again, it’s not that simple.

Why you might rent

Renting has benefits beyond just saving money in the short term.

It doesn’t require all the grunt work of home maintenance and upkeep, which can be pricey and time-consuming. Homeowners can expect to spend between 1% and 4% of their home price on maintenance annually.

“One of the biggest advantages of renting is the lack of responsibility when it comes to major systems and appliances within your living space,” says Scott Waters, a real estate professional with Real Broker LLC, in Maclean, VA. “When there’s an issue with a major system in a home you rent, the landlord is ultimately responsible for taking care of both the tenant and the problem.”

Renting also offers flexibility.

“If you woke up tomorrow and wanted to move to another state, as a homeowner, you’d have to list your home, wait for an offer, and go through the settlement process. As a renter, you have the flexibility to move at the end of your lease or even sublease your space,” Waters says.

On the other hand, renting doesn’t allow you to build the equity you would if you owned your home. On top of that, your living situation is at the whims of your landlord. And you’re essentially paying someone else’s mortgage while gaining no long-term value.

Why you should buy

Buying offers you a chance to build equity and long-term wealth.

While interest rates are high compared with where they were a few years ago, that shouldn’t keep you out of the market. There’s no way to know, after all, if they’ll go up or down in the future.

“Even with current mortgage rates hovering around 6.92% to 7.05%, buying a home can still be a smart choice. Yes, these rates are higher than we’ve seen in recent years, but they’re not as daunting when you consider the long-term benefits of homeownership,” says Mike Roberts, co-founder and CEO of City Creek Mortgage in Draper, UT.

There’s also stability with a fixed-rate mortgage.

“Renters are often at the mercy of landlords who can increase rent annually,” Roberts says. “With a fixed-rate mortgage, your payment stays the same for 30 years. That predictability is worth something.”

And not much beats the security of owning your own home.

However, there are some downsides: You’ll need a fairly hefty chunk of change for a down payment—the median down payment between July and September of this year was $30,300—and you’ll be responsible for any maintenance issues.

So is it worth it to buy?

Potential buyers should weigh the short-term savings against the long-term opportunity to build equity, says Realtor.com economist Jiayi Xu.

“For those considering a transition from renting to homeownership, it’s crucial to stay informed about market trends and thoughtfully assess the expected duration of residence in their next home,” she adds.

If you decide to buy

“If a buyer can stomach the current interest rates and can come up with capital for a down payment, they are likely playing in a less competitive field right now—specifically because conditions are difficult,” says Graham Hill, a real estate consultant with Find Hokkaido Agents. “Deals that barely make sense now will become more profitable as prices rise, and then again when those owners refinance after interest rates come down,” which also seems likely.

Xu recommends using the Realtor.com Rent vs. Buy Calculator to determine whether it makes sense to pursue homeownership now or later.

“This tool helps users understand how long it might take for purchasing a home to become the more financially advantageous option based on current market conditions,” she says. “By offering personalized insights, the calculator empowers consumers to evaluate not only the best option for their current situation but also how the decision could impact their finances in the years to come.”

If you choose to rent

There is generally—but not always—a correlation between median listing prices and rental prices. For instance, Pittsburgh has the least expensive median listing price among the top 50 metros, at $314,825. That equates to a monthly mortgage of $1,664 before property taxes and insurance are factored in.

Yet Pittsburgh’s median monthly rent is comparatively high: $1,462. It is only the 19th most affordable city to rent in, and is $400 more than the least expensive rental market on the list, Oklahoma City, OK, with a median monthly rent of $1,021.

Using the current 6.93% interest rate and assuming a 20% down payment on a 30-year fixed mortgage, we’ve compared renting with buying in some of the most and least expensive rental markets.

5 of the most expensive rental markets

San Jose, CA

Median monthly rent: $3,333
Median monthly mortgage (excluding taxes and insurance): $7,367
Buying a home costs this much more than renting one: 119.8%

Boston, MA

Median monthly rent: $2,944
Median monthly mortgage (excluding taxes and insurance): $4,426
Buying a home costs this much more than renting one: 50.34%

Los Angeles, CA

Median monthly rent: $2,848
Median monthly mortgage (excluding taxes and insurance): $6,078
Buying a home costs this much more than renting one: 113.41%

New York, NY

Median monthly rent: $2,881
Median monthly mortgage (excluding taxes and insurance): $4,029
Buying a home costs this much more than renting one: 39.85%

This one-bedroom New York City apartment is available for $3,000 a month.
Realtor.com

San Francisco, CA

Median monthly rent: $2,766
Median monthly mortgage (excluding taxes and insurance): $5,266
Buying a home costs this much more than renting one: 90.38%