Buying A Home Is Becoming Much More Expensive Than Renting One
The monthly costs of owning a home have always been higher than renting. This is the tradeoff many make in order to unlock some of the benefits of homeownership: building wealth through equity and price appreciation, living in a particular community, long-term housing stability, etc.
But especially since 2020, this homeownership premium -- the extra costs that homebuyers take on to access these benefits -- has been growing quickly. This comes not only from home prices (which increased over 50 percent from 2020-2026) but also higher interest rates, insurance premiums, energy costs, and more. Renting does not provide a complete respite from high prices; over half of renter households are "cost-burdened," spending more than 30 percent of their income on rent. But the rental market is unquestionably cooling, and as a result more families are revisiting the "buy or rent" decision.
The following dashboard provides a glimpse into the reality of that decision. It compares median monthly housing costs for two groups:
- New homeowners, who have a mortgage and purchased their home within the past 12 months (red)
- New renters, who similarly moved into their home within the past 12 months (blue)
Nationwide, the median housing cost for new homeowners in 2024 was $2,679, 64 percent higher than the median cost for new renters ($1,630).1 Notably, that gap has increased by more than 20 percentage points since 2021, the last year that new homeowners were enjoying historically low, sub-3 percent mortgage interest rates.
This pattern holds in most housing markets across the country, with some of the largest homeownership premiums found not only in high-price markets like San Francisco CA (+120 percent) and Seattle WA (+111 percent), but also more-affordable ones like Omaha NE (+107 percent) and Wichita KS (+122 percent). Even the nation's smallest premiums still exceed 30 percent, or more than $500 per month.
Homeownership v. renter costs for the 100 largest metropolitan areas
The table below presents monthly median homeowner and renter housing costs in 2024, for recent movers who moved into their homes in the previous 12 months. Homeowner costs include mortgage payments, utilities, property taxes, insurance, and condo/HOA fees if applicable. Renter costs include contract rent and utilities.
| Metro Area | Homeowners | Renters | Premium ($) | Premium (%) |
|---|---|---|---|---|
| Akron, OH | $1,821 | $1,034 | $787 | +76% |
| Albany-Schenectady-Troy, NY | $2,484 | $1,580 | $905 | +57% |
| Albuquerque, NM | $2,253 | $1,284 | $969 | +75% |
| Allentown-Bethlehem-Easton, PA-NJ | $2,442 | $1,830 | $612 | +33% |
| Atlanta-Sandy Springs-Roswell, GA | $3,112 | $1,850 | $1,261 | +68% |
| Augusta-Richmond County, GA-SC | $2,086 | $1,522 | $564 | +37% |
| Austin-Round Rock, TX | $3,350 | $1,786 | $1,564 | +88% |
| Bakersfield, CA | $3,156 | $1,806 | $1,350 | +75% |
| Baltimore-Columbia-Towson, MD | $3,012 | $1,860 | $1,151 | +62% |
| Baton Rouge, LA | $2,209 | $1,181 | $1,028 | +87% |
- The numbers presented here reflect the median housing costs for owner-occupied vs. renter-occupied households in each location. These prices do not control for differences in the types of housing across the two groups, for example, owner-occupied units skewing heavily towards single-family homes, bigger lot sizes, etc. The gap presented here should not be interpreted as the premium paid for owning vs renting a similar unit, rather it is the gap between owning the typical owned unit vs renting the typical rented unit.↩
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