If you live in the big city, it’s officially better to rent than buy a home pretty much anywhere, according to financial products comparison site Bankrate.
The monthly cost of renting across all 50 of the largest metro statistical areas (MSA) is 37% cheaper than buying a typical home, Bankrate said. As of February, the typical monthly mortgage payment of a median-priced home in the U.S. was $2,703, while the typical monthly rent nationally was $1,979.
With such a large gap between what it takes to buy versus renting a home, Americans who are already financially stretched should feel confident they're making the right choice to rent right now, said Bankrate Analyst Alex Gailey.
“For those weighing whether they should rent or buy right now, all signs point to renting as the most cost-effective option in most major U.S. cities,” Gailey said.
In 21 of the 50 largest U.S. metros, the typical monthly cost of owning is at least 50% more expensive than the typical monthly cost of renting. Four of the five top metros with the largest gap are in the West, where the cost of living tends to be higher, Bankrate said.
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The Northeast and Midwest, where the cost of living tends to be lower, had the smallest gaps, but it was still cheaper to rent than buy, Bankrate said.
How much is that public school worth?Want to live near your state's top schools? Prepare to pay $300,000 more for your house.
It depends on your financial situation.
A recent Bankrate survey found 42% of Americans believe now is a bad time to buy a house.
“If you can’t afford a home in this market, you should put your FOMO aside and keep renting,” Gailey said. Use the time “as an opportunity to keep building your savings, pay down your debt and build wealth in alternative ways, investing in the stock market through a retirement account, for example.”
The best time to buy a home is when you can afford it.
“If you’re financially ready to buy a home − as in you have a down payment saved up, little to no debt and a fully funded emergency fund − then it may be riskier to time the housing market,” Gailey said. “You should date the rate and marry the house. You can always refinance a year or two from now when interest rates are lower.”
Medora Lee is a money, markets, and personal finance reporter at USA TODAY. You can reach her at [email protected] and subscribe to our free Daily Money newsletter for personal finance tips and business news every Monday through Friday.
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