Renters, You May as Well Buy a House if You Live in These Cities
- New data from the Urban Institute shows the cities where a “rent gap” is the most pronounced.
- In these cities, it can be much more affordable to buy rather than rent.
- With just 3.5% down on a mortgage, someone paying rent might come out ahead financially by purchasing a home.
If you’re a renter, looking at house prices may become something of a second hobby. You want to know how much it would cost to actually buy a place, not merely rent. In some cities, the cost of renting is astronomical — but so is buying. So, you sit and wait. Or come to terms with the fact that you’re going to rent far into the future.
New data from the Urban Institute, however, shows that in many of America’s cities, buying is more than just an option. It might actually be a better option than renting. “The nature of the affordability challenge looks different across the country. In 17 of 33 large metropolitan statistical areas (MSAs), it’s cheaper to own a home, putting 3.5 percent down, than it is to rent. And in many cities where homeownership is the more affordable option, it’s expensive to buy a home,” the UI’s team writes.
But it’s also expensive to rent in those cities. So, if you’re in a case where you’re paying a lot for housing, you may as well look at what you can get with a small down payment. Here are the top 10 cities where homes may be more affordable as renting.
10. Houston, Texas
- In Houston, there’s an abundance of space — meaning there’s a way to increase the housing supply.
If destructive hurricanes and flooding haven’t made you want to move away from Houston, the good news is that houses are fairly affordable. As you know, Texas is mostly a big, flat sprawl — which is great for housing supply, as there’s plenty of room to build. If you’re renting in the country’s fourth-largest city, it may be cheaper to buy.
Next: A sprawling Florida city
9. Orlando, Florida
- Buying in Orlando also puts you in close proximity to Disney World. A win-win.
Orlando is another city that has a lot of sprawl. And again, that makes it relatively easy to increase housing supply as opposed to a geographically constrained city like, say, San Francisco. Interesting as it is, the cost of renting in Orlando can be quite high, and opting to purchase a home can bring housing costs down for a lot of people.
Next: The first city on our list in the state of Ohio
8. Cincinnati, Ohio
- This is the first of many Rust Belt cities on our list.
At the other end of Ohio, Cincinnati is another Midwest city that offers prospective buyers some realistic options. House prices there are not nearly as high as in other cities, but in many cases, rent can be. For that reason, it makes a lot of sense to test the waters if you’re stuck renting at a relatively high price.
Next: The second Ohio city on our list
7. Cleveland, Ohio
- Yet another city in the Rust Belt.
Cincinnati is more or less in the same situation as Cleveland, and is even in the same state. It’s another Rust Belt town that has had to go through an adjustment period with the new economy. There were some growing pains, but now the city’s swinging back and is an affordable option for young people looking to lay down some roots.
Next: A city not far from Cleveland
6. Pittsburgh, Pennsylvania
- If you aren’t getting it by now: The Midwest is affordable for prospective home buyers.
No, we’re not done with the upper Midwest or Rust Belt yet. Pittsburgh is in the same basket as our two preceding cities, being in the Midwest and having gone through some growing pains over the past few years. But the city’s back and has even been rumored as one of Amazon’s top targets for the company’s second headquarters.
Next: Another city in Florida
5. Tampa, Florida
- Florida also landed a couple of cities on our list.
Along with the Midwest, Florida is the other area that dominated on the Urban Institute’s list. We’ve already covered Orlando, and now Tampa lands at number five. Florida is popular with renters (and we’re not done with it yet, read on) but the housing in many cities can be purchased at relatively comparable (monthly, anyway) prices.
Next: The birthplace of America
4. Philadelphia, Pennsylvania
- Philly’s set for a renaissance, so strike while the iron is hot.
It’s a big old city with lots of history, but Philly’s earned itself a reputation. You may end up spending quite a bit on rent if you live there, too, while you could check out the house prices in the city and maybe save on your monthly expenses. Plus, you can throw batteries at local sporting events!
Next: America’s third-largest city
3. Chicago, Illinois
- Chicago is yet another city with high rents but relatively affordable houses.
Love the city but can’t afford New York or San Francisco? Chicago is a good choice. And make no mistake, Chicago is full of very expensive places to live. But it has its cheaper parts, too — unlike some other cities. According to the Urban Institute, Chicago has one of the biggest “rent gaps” in the country, meaning you can find cheaper housing if you opt to buy.
Next: A Rust Belt city that’s climbing its way back
2. Detroit, Michigan
- Detroit’s making a comeback, and for the time being, there are housing deals to be had.
For a long time, most people would scoff at the idea of living or moving to Detroit. That probably still holds true for some, but like other Midwestern cities, Detroit’s coming back. And because it was in such a rough spot for such a long time, it’s full of affordable places to live. You can find houses for insanely cheap if you’re willing to put some work into them.
Finally: The city where you should stop paying rent immediately.
1. Miami, Florida
- A warm, beautiful, coastal city with high rent? Why not buy?
The “rent gap” is more pronounced in Miami than in any of the other 33 metro areas included in the Urban Institute’s report. Miami is full of tall, fancy condo and apartment buildings, many of which charge a lot for rent. You can, if you want to shop around, buy one to save on monthly housing costs, too. We’re not saying it’ll be cheap — but when you’re already paying astronomical rent prices, why not take a look?
See the complete report from the Urban Institute.
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