Top 3 cities where it’s cheaper to buy than to rent one

Turning your dream of buying a home into reality might seem pretty difficult these days, thanks in part to high mortgage rates and sale prices. But there are a few cities where taking on that mortgage — instead of paying monthly rent — is the smarter financial decision.In a recent report, Redfin looked at the 50 largest cities in the U.S. and found the top three where it’s still cheaper to buy than rent, meaning the average home has an estimated monthly mortgage cost lower than its estimated rental cost.”Buying a home often makes more financial sense than renting if you can afford a down payment and monthly mortgage because you’re building equity. When you own your home, your home pays you; when you rent, you and your home pay your landlord,” Redfin Deputy Chief Economist Taylor Marr stated in a press release.Detroit. Mich.F11photo | Istock | Getty Images”But buying isn’t a feasible option for everyone. Some people move around a lot, so renting might make more sense because they won’t be in their home long enough to build equity,” Marr added.”Many others simply don’t have the money for a down payment — a situation that has become increasingly common due to rising mortgage rates and elevated home prices.”The report and ranking is based on an analysis assuming a 5% down payment and a 6.5% mortgage rate for U.S. single-family homes, condos/co-ops and townhouses across the 50 most populous cities.Top 3 cities where it’s cheaper to buy than to rentDetroit, Mich.Philadelphia, Pa.Cleveland, OhioIn Detroit, the number one city on the list, the typical home is 24% less expensive to buy than rent.The average estimated monthly mortgage payment for homebuyers is $1,296, compared with an average estimated monthly rent of $1,697.Detroit is the second-largest city in the Midwest after Chicago and is known as the center of the U.S. automobile industry. The biggest companies, General Motors, Ford, and Stellantis North America (Chrysler), all have headquarters in the area.Philadelphia, Pennsylvania ranked as the second city in the U.S. where it’s cheaper to buy a home than rent.Jon Lovette | DigitalVision | Getty ImagesThe second city on the list is Philadelphia, where the typical home is 7% less expensive to buy than rent.Philadelphia is the second-most populous city in the Northeast and Mid-Atlantic regions after New York City. It was originally the country’s capital until 1800 and is home to some of the nation’s leading centers for higher education and academic research.Cleveland rounds out the list. The typical home is 4% less expensive to buy than rent in the Ohio city.’It’s very hard to recoup your investment in less than five years’Cleveland, OhioKen Redding | The Image Bank | Getty ImagesWhen considering whether or not it’s time to buy, It’s crucial to think about the amount of time you will stay in your new home, David Steckel, Director of Strategic Partnerships at Thumbtack and General Contractor/Owner of Alair Homes, tells CNBC Make It. It should be at least five years.”The reason why you want a five-year plan is it’s very hard to recoup your investment in less than five years,” he said.DON’T MISS: Want to be smarter and more successful with your money, work & life? Sign up for our new newsletter!Get CNBC’s free Warren Buffett Guide to Investing, which distills the billionaire’s No. 1 best piece of advice for regular investors, do’s and don’ts, and three key investing principles into a clear and simple guidebook.

Show More

Related Articles