Buying a home may be the American Dream, but its value as a financial move has been called into question in the years since the housing crash. In many cases, renting has been the cheaper option.
But rents have skyrocketed in recent years, and while home prices have gone up too, interest rates are near historic lows, making monthly payments more affordable. Even with taxes, insurance and maintenance costs, GoBankingRates.com has found owning is cheaper than renting now in 42 states.
And while New York has the reputation for some of the priciest real estate in the country, the Empire State is the top state where it makes more economic sense to buy. And it really wasn’t even close. With the average rent in New York now almost $3,300 a month, GoBankingRates found owners save an average $1,600 a month over renters.
Still hard to buy
“The good news is mortgage rates are near historic lows,” said Kristen Bonner, who was the lead researcher on the study. “Unfortunately, Americans are still running into road blocks with being able to save enough money to afford a down payment, and are therefore forced to rent.”
The study made a side-by-side comparison of median rent prices for single-family homes against the median list price of homes in each state. The study assumed a 20% down payment for the median list price and applied a 30-year fixed-rate loan term. It also included the cost of property taxes and insurance.
It’s still cheaper to rent in Washington, DC, Hawaii, Montana and Utah, but the gap is narrowing. Meanwhile, Massachusetts residents can save $559 a month by owning a home and Illinois residents can pocket $522 in savings.