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By Giulia Carbonaro
Senior Reporter
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While mortgage rates are still hovering around the 7 percent mark and the housing market remains historically unaffordable, there are 12 cities in the country where owning a home is cheaper than renting, according to a recent report by Zoocasa.
The cities are spread all across the United States, though four out of 12 can be found in the state of New York. They include New York City, New York; Pittsburgh, Pennsylvania; Syracuse, New York; Peoria, Illinois; South Bend, Indiana; Chicago, Illinois; Rochester, New York; Miami, Florida; Cleveland, Ohio; Charleston, South Carolina; Buffalo, New York; and New Orleans, Louisiana.
Zoocasa, a real estate listing website, analyzed market data for 111 markets across the U.S. and compared monthly rental prices and monthly mortgage payments for the median single-family home in each market. Average two-bedroom rental prices were sourced from Zumper's June Rental Report and mortgage payments were calculated with an 8 percent down payment, 30-year amortization, and a 6.78 percent fixed rate.
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The report found that New York had the biggest gap between monthly rent and mortgage payments at $781—but the city has also one of the highest average rents and mortgage payments in the country, so it doesn't exactly feel like a win for homebuyers.
Chicago had the second-biggest difference between monthly rent and monthly mortgage payments, at $609. In the Illinois city, the average two-bedroom rent is $2,700—among the most expensive within the cities considered—and the average monthly mortgage payment is $2,091.
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The situation is much better for homebuyers in Pittsburgh and Syracuse, which have relatively low median home prices. In the former city, the monthly cost of renting a two-bedroom apartment is $1,550, according to Zoocasa, while the average monthly mortgage payment is $1,240—$310 cheaper. In Syracuse, renting ($1,500) is also $310 cheaper than the city's average monthly mortgage payment ($1,190).
The cheaper monthly mortgage payments are in Peoria ($761) and South Bend ($1,077). In these cities, mortgage payments are $289 and $55 cheaper, respectively, than the monthly rent for a two-bedroom flat, which is $1,050 in Peoria and $1,132 in South Bend.
Here's a list of the 12 cities and the respective price difference between monthly rent payments and monthly mortgage payments.
- New York, NY: $781
- Pittsburgh, PA: $310
- Syracuse, NY: $310
- Peoria, IL: $289
- South Bend, IN: $55
- Chicago, IL: $609
- Rochester, NY: $229
- Miami, FL: $109
- Cleveland, OH: $101
- Charleston, SC: $78
- Buffalo, NY: $75
- New Orleans, LA: $48
While in these 12 cities buying a home is cheaper than renting, the U.S. housing market remains widely unaffordable. As of June, according to the latest data from Redfin, the median sale price of a home in the country was $442,451, up 4 percent compared to a year earlier.
The average rent for an apartment in the U.S. is currently $1,713 per month for an average apartment size of 899 square feet, according to data from RentCafe. The most affordable states for renters, according to the website, are Oklahoma (for an average rent of $1,001 per month), North Dakota ($1,048 per month), and Arkansas ($1,067 per month).
The report also lists three U.S. cities where monthly mortgage payments are over $1,000 more expensive than rent. These include Tucson, Arizona ($1,043 more); Colorado Springs, Colorado ($2,137 more); and San Jose, California ($7,683 more).
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