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To rent or to buy, that is the question. Location makes an enormous difference in the rent-or-buy equation. If you want to live in a traditionally trendy city such as New York City or on the California coast, most can forget about homeownership unless they’re also considering whether they’re going to spring for a new luxury boat this year as well: A home in New York City costs one million more than Baltimore City’s median home price of $167,500. But if a potential buyer is willing to try out an affordable, low-key city like Cumberland, New Jersey, then homeownership is within reach.
The most important question for many potential home buyers isn't about the quality of the local school districts, whether mortgage interest rates will fall, or commute times. Instead, it's whether it makes more financial sense to just keep renting, rather than sinking money into the purchase of a home. And it all depends on where you live.
In more than 8 out of 10 counties, 84%, it was cheaper to rent than to buy in the fourth quarter of 2019, according to a recent realtor.com® report. In the past year, it has become better to buy in 26 counties—in part because mortgage rates have dropped under 4% in that time.
The economics team at realtor.com analyzed the 593 counties with at least 100,000 residents where sufficient data was available to come up with its quarterly Rent vs. Buy report. It looks at the percentage of income required to rent and to purchase a home, using listing, rental, homeownership, mortgage, and income data.
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