While home prices have soared across the country in recent months, rents have risen, as well. And while renting is great for those who enjoy the amenities and carefree lifestyle that apartment communities provide, you may be wondering if renting is still the better option for your wallet. In most cases it is, especially when you factor in taxes and maintenance costs. But in some places, the difference between renting vs. buying is significant.
A recent CoStar news report named Spokane, Washington as the top city for renting instead of buying. This was based on an index that measures the ratio of home prices to rent created by Florida Atlantic and Florida International universities. The researchers tracked 100 areas across the US and determined that it makes more sense to rent than buy in many places, but especially in these 10 cities:
- Spokane, WA
- Austin, TX
- Nashville, TN
- Raleigh, NC
- Seattle, WA
- Charlotte, NC
- Dallas-Fort Worth, TX
- Ogden, UT
- Provo, UT
- San Francisco, CA
According to FAU, the comparison between buying and renting considers a variety of factors, including rent-to-price ratio, mortgage rates, the expected rate of inflation, housing price appreciation, and taxes. With interest rates on the rise, mortgage payments are expected to increase, as well. Currently, the average rent in the US is $1,659. The average home price in the US is $456,800, according to US census data. And while mortgage payments vary depending on how much you put down and your interest rate, the average mortgage payment is about 36 percent higher than it was a year ago.
Researchers divided each area’s average home price by the annual rent to find the premium, or discount. The difference was in the double digits for 80 of the 100 cities, with 17 cities on the list at 20 percent or more. The top 10 cities are the cities with the largest difference, and Spokane outranked all other cities at 32.08 percent. Let’s take a closer look at each city in the top 10.
Spokane, WA
With its mountain views and location along the Spokane River, this beautiful city is great for outdoor adventures. It’s also home to Gonzaga University and Washington State University-Spokane. The average rent for a one-bedroom apartment in Spokane is $1,192 (as of September 2022), which is below the national average of $1,659. The average price to buy a home, according to a report conducted by the Spokane Association of Realtors, is $400,000. This is an increase of about 23 percent over last year.
Austin, TX
A fun-loving city known for festivals like South by Southwest and Austin City Limits, Austin is home to a large tech industry and the top-rated University of Texas at Austin. Rent for a one-bedroom apartment in Austin averages $1,534, which is an increase of about 18 percent over 2021. Meanwhile, the cost to buy a house in Austin rose to an all-time high, according to the Austin Board of Realtors, up more than 22 percent in the past year to $624,000.
Nashville, TN
The Music City is a Southern gem, home to the Grand Ole Opry and a hub for music ranging from country to rock. Over the past year, rent in Nashville increased by more than 17 percent to about $1,616 for a one-bedroom apartment. According to Greater Nashville Realtors, home prices in Nashville average $490,000, an increase of about 12.8 percent over last year.
Raleigh, NC
An epicenter for science and technology, Raleigh provides much more than a thriving business scene. Its location places it between the ocean and the mountains, with a roughly two-hour drive to each. One-bedroom apartments in Raleigh average about $1,647, an increase of 21.6 percent over last year. According to Triangle MLS (Local Market Update, February 2022), home sale prices have increased 25.4 percent to $466,359.
Seattle, WA
Arguably one of the most beautiful cities in the country, Seattle’s landscape is as alluring as its job opportunities. A variety of companies are headquartered in the city, including Amazon and Starbucks. Unlike most of the cities on the list, Seattle’s rents are trending downward. The average price for a one-bedroom apartment in Seattle is $1,857, which, while still higher than the national average, is a decrease of 25.6 percent over last year. While home prices are also trending downward in the Seattle area, the average price of $520,000 is still above the national average.
Charlotte, NC
There’s a lot of buzz about the Queen City, which finds its way to a variety of “best” lists due to its terrific weather, business opportunities, and range of attractions. Because Charlotte is one of the busiest cities in the state, rents have been trending upward. A one-bedroom apartment in Charlotte averages $1,576, which is an increase of about 35.5 percent over last year. According to Canopy Realtor Association (Local Market Update, May 2022), the average home price in Charlotte is $475,778, an increase of 17.2 percent.
Dallas-Fort Worth, TX
As one of the nation’s largest cities, Dallas is home to more than a million residents. It is often combined with Fort Worth and referred to as the Dallas-Fort Worth metroplex, an area that covers 11 counties. In Dallas, a one-bedroom apartment is about $1,883. Rent has increased more than 22 percent in the last year, placing rent in Dallas above the national average. While home prices have trended down slightly recently, according to Re/Max DFW Associates, they still average about $413,900.
Ogden, UT
If you love outdoor adventures from bicycling and hiking to skiing and snowboarding, Ogden delivers in a stunning setting. Rent in Ogden is well below the national average, just $993 for a one-bedroom apartment. That’s an increase of about 4.2 percent over last year. While home prices have leveled off a bit in Ogden, the average sale price is $385,000.
Provo, UT
Bordering Utah Lake, the home of Brigham Young University provides dazzling views, great outdoor recreation, and a strong sense of community. Provo rents have increased by 22.1 percent in the past year, with a one-bedroom apartment costing around $1,213. Home prices have come down since they peaked over the summer, but the average price for a house in Provo is still about $474,000.
San Francisco, CA
From the “painted ladies” to the Golden Gate Bridge, there’s no place like San Francisco. The city’s famous hills are very walkable, with the option to hop on an iconic streetcar when you want to get around a bit faster. All the history and beauty of San Francisco comes at a notoriously steep price, with rents hovering around $3,485 for a one-bedroom apartment. While home prices have fallen over the last few months, the average price of a home in San Francisco is still around $1.4 million.
Across the US, housing costs have increased to record levels. A report by the National Association of Realtors found that home prices have increased by more than $10,000 each year since 1990. With nearly one-third of all households spending more than 30 percent of their income on housing, it’s more important than ever to find a rental that fits your needs and your budget, no matter where your apartment is located.
