8 Cities Where Renting Makes More Financial Sense Than Buying
However, home prices have skyrocketed since the pandemic, leaving many Americans wondering if buying is still the smart choice.
What the Research Shows
A recent study from Zillow reveals that the answer isn't the same everywhere. While homeowners often end up better off financially than renters in the long run, buying isn't always the winning move—especially in cities where homes cost the most.
Zillow looked at data from April 2026, using an average home price of about $369,000 and an average monthly rent of around $1,951. They assumed buyers would get a 30-year mortgage with an interest rate of about 6.2%.
What Is a "Breakeven Point"?
The breakeven point is how long it takes for buying a home to become a better financial deal than renting. Across the country, this averages about 6 years. That's actually an improvement—back in October 2023, it took over 8 years to break even.
Cities Where Buying Pays Off Fastest
In some cities, buyers who put down 20% can break even in less than 5 years:
| City | Years to Break Even |
|---|---|
| Columbus, Ohio | 4.1 years |
| Memphis, Tennessee | 4.2 years |
| Buffalo, New York | 4.2 years |
| Indianapolis, Indiana | 4.3 years |
| Cincinnati, Ohio | 4.6 years |
| Louisville, Kentucky | 4.8 years |
Cities Where Renting Is the Smarter Choice
On the flip side, there are places where homeowners may never come out ahead—even after 30 years of paying a mortgage. Here are the cities where renters win:
| City | Years to Break Even |
|---|---|
| San Francisco | Never (30+ years) |
| New Orleans | Never (30+ years) |
| San Jose, California | Never (30+ years) |
| San Diego, California | 23.3 years |
| Seattle | 19.7 years |
| Austin, Texas | 18.4 years |
| Los Angeles | 17.1 years |
| Portland, Oregon | 16.7 years |
Keep in mind that these numbers assume today's housing market stays the same for decades, which may not happen.
What Goes Into the Math?
Comparing renting to buying isn't just about monthly payments. Here are some important factors:
- Upfront costs: Buyers have to pay closing costs and a down payment, which renters don't face.
- Down payment size: Putting down the traditional 20% saves money in the long run because you'll pay less interest. However, a smaller down payment might help you break even faster in some cases. The downside? A smaller down payment means a bigger loan, more interest, and often extra costs like mortgage insurance.
- How long you plan to stay: If you're planning to move in just a few years, buying probably doesn't make sense. You won't live there long enough to recover your upfront costs or build much equity.
- Opportunity cost: Money tied up in a home can't be invested elsewhere. Some people prefer renting or making a smaller down payment so they can put their extra cash into other investments.
One Important Catch
Zillow's study assumes that renters take the money they would have spent on a down payment and closing costs and invest it instead. In reality, many renters don't have that kind of money saved up—that's often why they're renting in the first place.
The Bottom Line
If you're a renter hoping to come out ahead financially compared to homeowners, having savings to invest can make a big difference. And if you live in an expensive city, renting might actually be the smarter money move for years to come.
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