In these US cities, it’s cheaper to buy a home than to rent

Real Estate

By Hannah Frishberg

June 1, 2023 | 1:33pm

Becoming a landlord is more affordable than paying a landlord in less than five of the nation’s most populous metros across the nation, a new analysis has found. 

Despite homeownership being a core part of the American dream, the reality remains that, in most of the country, paying rent is much more doable than paying a mortgage — except in these select cities. 

According to a new analysis by real estate brokerage Redfin, there are four diamonds in the rough speckled across the US in which buying a crib is actually the cheaper way to live: Detroit, Philadelphia, Cleveland and Houston. 

In all four metro areas, researchers found, mortgage payments are less than rent — a rarity, as nationwide most homes cost 25% more to buy than rent. 

“It was almost surprising there were any places” where buying was cheaper than renting, Redfin deputy chief economist Taylor Marr told the Philadelphia Inquirer of the company’s findings, which published last month. 

“Higher interest rates really changes the equation with owning and renting,” Marr added.

At the top of the list, Redfin found buying in Detroit is the most appealing when compared to renting, as the typical home is 24% less expensive to purchase than to rent. 

Next is Philly, where owners get a comparative 7% discount. Then comes Cleveland (a 4% discount) and finally Houston (1%). 

While it may be easier to buy a place in those four spots, Redfin notes that the affordability is a double-edged sword. 

The reason home values there are lower is partially because they’re stagnant, especially when compared to pandemic boomtowns such as Phoenix and Miami.

Thus, buying a place in Cleveland or Houston is less costly, but buyers should also expect to build less equity than they would by buying in a hotter real estate market.