These are the 10 best cities for apartment dwellers as mortgage rates stay oppressively high — and the 3 housing markets where buying a home is actually cheaper than renting

US home prices, property market, housing

Renting is a usually superior deal to buying right now, but there are several exceptions.

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  • Renting is generally cheaper than buying in the 50 biggest US cities, Realtor.com noted.
  • Rent growth remained negative in August, even as lofty mortgage rates complicate buying for many.
  • Here are the 10 best cities for renters, and three places for hopeful homebuyers to look now.

Lower rent prices and multi-decade-high mortgage rates mean that it’s smarter to rent than buy in most large US cities right now, according to Realtor.com.

Rent fell from 2022 for the fourth straight month in August, the firm announced in a September report. The median going rate for an apartment with two or fewer bedrooms in one of the 50 top US markets slid 0.6% in the late summer, though that was more moderate than July’s 1% drop.

Realtor.com



 

“Seasonality and recent momentum in the rental market make it very unlikely the market will see a new peak rent in 2023,” wrote Realtor.com’s Jiayi Xu and Danielle Hale in the report.

Landlords charged a median price of $1,752 per month for starter apartments in those big cities, which Xu and Hale noted was $7 lower than the prior month and $25 off the peak in July 2022. But compared to pre-pandemic levels, apartments cost $336 more per month, or roughly 24%.

Those findings generally line up with a recent report from online rental platform Zumper, which found that rent growth has slowed significantly in the last year. However, Zumper’s data for the top 100 US real estate markets shows that rents are at all-time-highs and are still rising, albeit slowly, while Realtor.com said that rent has turned negative in the nation’s largest markets.

Why renting is still probably better than buying

Whether rent is at record highs or just below them, it’s clear that living in apartments isn’t cheap.

However, buying isn’t a better option for most Americans, Realtor.com’s researchers argued. Mortgage rates are at their highest levels in over 20 years, and limited housing supply has kept home prices from plummeting. The result is an affordability crisis with seemingly no end near.

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Of the 50 biggest metropolitan areas in the US, it costs less to rent a starter home than buy one in a staggering 94% of them, Xu and Hale wrote. The typical starter home sells for $2,959, which is close to $1,200 more than renters’ median rate of $1,776.

Disparities between buying and renting stemmed from a split in how median costs changed in the last 12 months. The median price of a starter home for buyers with a 7% down payment rose 21.4% year-over-year as mortgage rates spiked, while renters enjoyed a 0.5% decline, the report found. The calculation included homeowners’ association fees, insurance, and taxes.

“The advantage of renting became more pronounced in all rent-favoring markets,” Xu and Hale wrote. “The monthly savings from renting in rent-favoring markets were $483 higher compared to the prior year.”

But there were three cities where buying was actually cheaper than renting in August, according to Realtor.com: Memphis, Tennessee; Pittsburgh, Pennsylvania; and Birmingham, Alabama. It was cheaper to buy in those cities by $43, $39, and $6 per month, respectively. And compared to last year, rent dipped or rose slightly while buying costs jumped between 11.2% and 38.4% across the three cities.

10 top metro markets for renters

Of the 47 largest US real estate markets, Realtor.com highlighted the 10 where the cost savings from renting an apartment over buying a home are most dramatic.

“These rent-favoring metros are mostly markets with higher concentration of tech workers and high earners, where both the average rent-cost and buy-cost are higher than the national average,” Xu and Hale wrote of the markets that made this list.

Below are the 10 metro areas where renting makes more sense than buying right now, along with the median rent, the median monthly cost of buying and how it compares to renting, and the year-over-year changes for renting and buying.

1. Austin-Round Rock-Georgetown, Texas



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Median rent: $1,670

Median monthly cost to buy: $3,946

Median monthly cost of buying vs renting: $2,276 (136.3% higher)

Year-over-year rent change: -8%

Year-over-year buy change: 9.2%

Source: Realtor.com

2. San Francisco-Oakland-Berkeley, California



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Median rent: $2,906

Median monthly cost to buy: $5,859

Median monthly cost of buying vs renting: $2,953 (101.6% higher)

Year-over-year rent change: -4.9%

Year-over-year buy change: 12.7%

Source: Realtor.com

3. Columbus, Ohio



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Median rent: $1,222

Median monthly cost to buy: $2,458

Median monthly cost of buying vs renting: $1,236 (101.1% higher)

Year-over-year rent change: 2.7%

Year-over-year buy change: 35.1%

Source: Realtor.com

4. Sacramento-Roseville-Folsom, California



JasonDoiy/Getty Images


Median rent: $1,898

Median monthly cost to buy: $3,779

Median monthly cost of buying vs renting: $1,881 (99.1% higher)

Year-over-year rent change: -3.9%

Year-over-year buy change: 29.9%

Source: Realtor.com

5. Los Angeles-Long Beach-Anaheim, California



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Median rent: $2,892

Median monthly cost to buy: $5,672

Median monthly cost of buying vs renting: $2,780 (96.1% higher)

Year-over-year rent change: -2.3%

Year-over-year buy change: 23.3%

Source: Realtor.com

6. San Jose-Sunnyvale-Santa Clara, California



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Median rent: $3,367

Median monthly cost to buy: $6,581

Median monthly cost of buying vs renting: $3,214 (95.5% higher)

Year-over-year rent change: -0.2%

Year-over-year buy change: 23.3%

Source: Realtor.com

7. Portland-Vancouver-Hillsboro, Oregon-Washington



Don Ryan/AP


Median rent: $1,709

Median monthly cost to buy: $3,314

Median monthly cost of buying vs renting: $1,605 (93.9% higher)

Year-over-year rent change: -5.2%

Year-over-year buy change: 13.8%

Source: Realtor.com

8. Boston-Cambridge-Newton, Massachusetts-New Hampshire



DenisTangneyJr/Getty Images


Median rent: $2,851

Median monthly cost to buy: $5,526

Median monthly cost of buying vs renting: $2,675 (93.8% higher)

Year-over-year rent change: 3.2%

Year-over-year buy change: 24.4%

Source: Realtor.com

9. Seattle-Tacoma-Bellevue, Washington



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Median rent: $2,168

Median monthly cost to buy: $4,156

Median monthly cost of buying vs renting: $1,988 (91.7% higher)

Year-over-year rent change: -3.7%

Year-over-year buy change: 21%

Source: Realtor.com

10. Phoenix-Mesa-Chandler, Arizona



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Median rent: $1,595

Median monthly cost to buy: $3,015

Median monthly cost of buying vs renting: $1,420 (89% higher)

Year-over-year rent change: -4.5%

Year-over-year buy change: 17.7%

Source: Realtor.com

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