Should you buy or rent when renting is cheaper in most US cities?

Nearly 50% of all American houses are selling above asking prices — and now renting is cheaper than owning in nearly every market.

Show me the evidence: According to LendingTree, the median costs for renters are lower than buying in the 50 largest US metropolitan areas — by an average of $606.

• NYC, SF and San Jose have the largest difference in cost — averaging $1,200.
• Orlando, Tampa, and Indianapolis have the smallest difference in cost — averaging $335

So is renting better? Depends on your goals, cash needs, and personal circumstances.

• By buying, your monthly payments go towards paying down your mortgage and increasing your equity on the house.
• By renting, you save on payments but what are you doing with that extra cash? If you’re investing with it, are you able to generate returns that are higher than buying a house?

In most cases, renting is better if you use those extra savings to invest or pay down loans. But just because it’s cheaper now, doesn’t mean the costs will stay the same.

One of the biggest risks to rising costs is inflation — which has steadily risen in 2021:

• In certain states, landlords can raise rents by more when inflation is higher.
• Rising inflation benefits home buyers with fixed rates — who pay the same interest despite rising cost of goods.

Also consider: Your timeframe. Unless you’re holding a property for a long period, you might not clear closing costs and other maintenance expenses. According to a May report by Bankrate, 21% of millennial homeowners regret buying a house due to high maintenance costs.

Dive deeper: Renting vs. Buying a Home: How to Decide — on the Rational Reminder podcast.