Buying vs. Renting a Home in 2021: Analyzing the ‘New Math’

House and key concept
Rising home prices have changed the rent-vs-buy dynamic. Image: Pixabay

Does it make more sense to buy or rent a home in 2021? How has the buying-vs-renting equation changed over the past year? Which cities are better for buyers, and which ones tend to favor renters?

These are common questions among renters and potential home buyers across the United States — and rightfully so. A lot has changed within the real estate and rental markets over the past year or so.

Home prices have risen substantially in some cities and more slowly in others. Rents have moved in both directions, depending on where you live.

The bottom line is that if you want to know which makes more sense, renting versus buying a home, you have to look at the current numbers and trends.

Analyzing the Nation’s 50 Largest Metro Areas

A new report from the housing research team at helps put this in perspective. They analyzed home prices and rents in 50 of the nation’s largest metro areas to see where buying beats renting, and vice-versa.

The result? Only 15 of those 50 metro areas favored buying. In those metros (shown in the first table below), the cost of purchasing a house was the same or cheaper than renting — on average.

But in most of the metro areas they examined, renting beats buying. That’s not surprising, when you consider that home prices in the U.S. have risen steadily in recent years, chipping away at purchasing power.

To quote the February 2021 report:

“The analysis, which compared the monthly cost of buying a median priced home to the median price of renting a two- to four-bedroom unit in each of the top 50 markets in January 2021, found buying cost the same or was cheaper in 15 of the nation’s 50 largest metros, up from 13 a year ago.”

An important note: On the purchase side, determined monthly housing costs based on a 30-year fixed mortgage loan with a 20% down payment. But that’s bigger than the average down payment among home buyers these days. Putting less money down would result in a bigger monthly mortgage payment, and would therefore change the buy-versus-rent equation considerably. Something to consider!

Here’s a closer look at the “new math” of buying vs. renting a home.

Where Buying a Home Beats Renting

Based on this study, buying a home beats renting in 15 of the nation’s 50 largest metro areas. (At least in terms of monthly costs.) These are housing markets with relatively low median home prices, where buyers can get more bang for the buck.

Cleveland, Chicago, Pittsburgh, Riverside and Miami topped the list of U.S. cities where the buying-vs-renting math tends to favor buyers.

MetroBuy (monthly)RentBuy % of IncomeRent % of Income
Cleveland-Elyria, Ohio$967$1,19519%23%
Chicago-Naperville, Ill.$1,691$1,97526%31%
Pittsburgh, Pa.$1,250$1,44523%27%
Riverside-San Bernardino, Calif.$2,224$2,53637%43%
Miami-Fort Lauderdale, Fla.$2,092$2,35040%45%
New Orleans-Metairie, La.$1,401$1,54531%35%
Baltimore-Columbia, Md.$1,561$1,69321%23%
Tampa-St. Petersburg, Fla.$1,494$1,60530%32%
Hartford, Conn.$1,589$1,70023%25%
Detroit-Warren, Mich.$1,277$1,35023%25%
St. Louis, Mo.$1,167$1,20920%21%
Philadelphia, Pa.$1,752$1,80028%29%
Minneapolis-St. Paul, Minn.$1,681$1,70523%24%
Louisville. Ky.$1,085$1,10020%20%
Indianapolis-Carmel, Ind.$1,190$1,19922%22%

It’s worth repeating:’s analysis is based on a 20% down payment among home buyers. If you were to put less money down (like something in the 5% – 10% range), you’d end up with a larger mortgage payment that might make renting a better deal.

In the words of Danielle Hale, chief economist for “There isn’t a one-size-fits-all answer to the question of whether it makes more sense to buy than rent.” That’s some truth right there.

Top 10 Metros Where Renting Wins

In most of the 50 metro areas considered in this study, renting a home is cheaper than buying (on average). A lot cheaper, in some cases.

Due to the rise in remote working and telecommuting, the nation’s biggest tech hubs have seen rents drop considerably in recent months. Many residents have chosen to leave urban centers in search of more affordable housing options elsewhere — often in the suburbs.

These trends have widened the renting-vs-buying gap in tech hubs like San Jose, Sacramento and Seattle. In these and other cities, residents who choose to rent a home saved an average of 30% per month compared to those who buy.

San Jose, Austin, Sacramento, Seattle and San Francisco topped the list of U.S. cities where the buying-vs-renting math tends to favor renters.

MetroBuy (monthly)RentBuy % of IncomeRent % of Income
San Jose-Sunnyvale, Calif.$5,548$3,20049%28%
Austin-Round Rock, Texas$2,467$1,61535%23%
Sacramento-Roseville, Calif.$2,639 $1,810 40%27%
Seattle-Tacoma, Wash.$2,975$2,06737%26%
San Francisco-Oakland, Calif.$4,660$3,27847%33%
Los Angeles-Long Beach, Calif.$4,875$3,43373%52%
San Diego-Carlsbad, Calif.$3,775$2,67553%37%
Portland, Ore.$2,382$1,69534%24%
Oklahoma City, Okla.$1,259$94525%19%
Richmond, Va.$1,671$1,30027%21%

Meanwhile, Home Prices Keep Climbing

Rising home prices will continue to change the rent-vs-buy dynamic throughout 2021 and into 2022. Even within the 15 metro areas shown in the first table (where buying a home might be cheaper than renting), house values continue to climb steadily.

In February, the research team at Zillow wrote:

“United States home values have gone up 9.1% over the past year and Zillow predicts they will rise 10.1% in the next year.”

Of course, housing conditions can vary greatly from one city to the next. Some parts of the country are seeing a rapid rise in home values right now, while others are experiencing more modest growth.

But overall, home prices in the U.S. will likely continue to rise in 2021.

House values have risen sharply in some of the metro areas shown in the second table above (where renting is the cheaper option). In the ridiculously expensive San Jose, California real estate market, “home values have gone up 15.3% over the past year” according to Zillow.

Austin, Texas and Sacramento, California also posted double-digit price increases over the past year or so. So it’s no wonder these (and other) metros are favoring renters over buyers in 2021.

Doing What’s Best for You

Ultimately, this is a personal financial decision. Reports like the one cited above give us a general sense of where renting versus buying a home might make the most sense, in terms of monthly costs.

But it goes beyond dollars and cents.

For many Americans — and arguably most of us — renting might be the better option in 2021. This is especially true for those who have suffered a COVID-related job loss or other financial setback.

In tough times, we have to do all we can to minimize our monthly expenses. And in many U.S. cities in 2021, that means renting a home instead of buying one.

We are often told that “homeownership is the American dream.” But that’s just marketing talk. Only you can decide what’s in your best interest.