Homeownership rates in the US have been on the rise over the last two years but the US Census Bureau reported that there was a drop in the first quarter of 2019. There are a number of factors that may affect someone’s ability to own a home including student loan debt and very high housing prices. Besides, based on our analysis, it’s actually cheaper to rent in the US than to own a home.
We have used data from the US Census Bureau in their recent American Community Survey. We calculated the median mortgage monthly payment in every state as well as median monthly rent payments. Our analysis shows that it’s only in the state of Florida where it’s cheaper to buy a home than to rent. In all the other states you will pay more to own a home than to rent. But there’s, of course, a variation in each state. In some states, it’s way cheaper while in others it’s just a little bit. Well, we have compiled the data and came up with the top ten US states where it’s cheaper to rent than buy.
Here is our full list:
- Puerto Rico - 85% cheaper to rent than buy
- Montana - 42% cheaper to rent than buy
- Wyoming - 40% cheaper to rent than buy
- Alabama - 39% cheaper to rent than buy
- Kentucky - 35% cheaper to rent than buy
- Louisiana - 34% cheaper to rent than buy
- North Dakota - 33% cheaper to rent than buy
- South Dakota - 33% cheaper to rent than buy
- Mississippi - 33% cheaper to rent than buy
- Rhode Island - 31% cheaper to rent than buy
We also noticed that buying a home in coastal cities like New York and San Francisco was a little friendlier than renting. There has always been this belief that buying a home in these areas is hard due to the high prices. But it’s actually not as bad as renting. In the South and the Great Plains, it’s significantly cheaper to rent than to buy. You can save more than 33% on housing costs there if you decide to rent than to buy.
Besides, there’s also the challenge of raising the down payment needed to get a mortgage. However, you can still make it happen by choosing to live in a rental house for a cheaper fee. This will free up some savings in your income that can be put up towards the down payment. In Puerto Rico, for instance, you can save up to 83% in your housing expenditure through a rental. This is a huge amount of money and you will only need a few years to come up with the required down payment if you still intend to buy a home.
We did also note in our analysis that housing prices are still high in the US. Whether you are buying or renting, you will still need to part with a sizable amount to make your dream a reality. The median monthly rental payment and the median monthly mortgage payment are still very high.