Is it better to buy or rent?

Whether it’s better to buy or rent depends on personal factors, but for many people, it comes down to what they can afford. And it’s not just finding a down payment or managing the monthly payments. Homeowners insurance and property taxes are part of the equation, and homeowners are responsible for all home maintenance and repairs.

On the other hand, real estate is a good investment; when you pay a mortgage, you earn equity in your home, while renting means you’re earning equity for someone else.

Still, when it comes down to the monthly payment, whether it’s better to own or rent largely depends on where you live.

Where is it cheaper to buy a home?

A 2024 study by found that there are no major U.S. metro areas where it is cheaper to buy rather than rent.

Where is it cheaper to rent?

The study found that it’s cheaper to rent in all 50 cities. Here are the top five cities where renters will save the most by forgoing home ownership.

1) Austin, Texas

Median monthly cost to own: $3,695
Median monthly rent: $1,530

2) Seattle, Washington

Median monthly cost to own: $4,422
Median monthly rent: $2,000

3) Phoenix, Arizona

Median monthly cost to own: $3,071
Median monthly rent: $1,543

4) San Francisco, California

Median monthly cost to own: $5,504
Median monthly rent: $2,815

5) Los Angeles, California

Median monthly cost to own: $5,369
Median monthly rent: $2,830

What should you consider when deciding whether to buy or rent?

The biggest consideration for most people is whether or not they can come up with a down payment to buy a house, but interest rates and the other costs of owning a home are factors.

However, if you do have a down payment, buying a house is generally a good investment. Even with fluctuations in the market, real estate tends to go up in value over time. Of course, there have been major economic downturns, but buying a house remains a relatively safe bet.

As a home increases in value over time and you pay down the mortgage, you build equity in the house that you can tap into if you need it or simply think of it as a nest egg. A home is a long-term investment, and if it’s done wisely, you will come out ahead over the years.

However, you need to consider the other costs of owning, including homeowners insurance, which averages $2,601 a year. Then there are maintenance, repairs, and property taxes to consider as well.

Is renting really a waste of money?

Although it's true that you are paying someone else’s mortgage when you rent and you aren’t earning any return on that money, renting certainly isn’t a waste of money and makes sense for some people. Like any other bill, monthly rent is something you pay to get something in return. In this case, it’s a roof over your head.

And the good news is that you’re not responsible for that roof. Or any other maintenance or repairs, which any homeowner will tell you can be very expensive. Many renters can also let someone else handle chores like yard work. And the average cost of a renters insurance policy is only $347 a year since you’re not responsible for the structure.