Key Points:

• Renting is currently more affordable than owning in most major markets, even after adjusting for equity gains.
  
  
• The decision to rent or buy isn’t just financial – it’s also about flexibility versus stability, and lifestyle needs.
  
  
• Local conditions vary widely, and in some markets, modest appreciation still tips the scales in favor of buying.
  
  

To rent or to own? That is the question. Amidst headlines that the rents are “too darn high” and elevated mortgage rates that make owning a home seemingly out of reach, it can be confusing. Today’s housing market has complicated this classic choice. We’re in the midst of a shift, with annual house price growth slowing to a more than 13-year low—and even turning negative in some places—while rent growth has moderated below its pre-pandemic average. A straightforward comparison of median rent to median homeownership costs historically concludes that renting is cheaper. But that overlooks the primary financial benefit of owning: building equity. From 2012 to 2022, strong house price gains meant owning made more financial sense nationally. From a cumulative perspective, a recent First American analysis showed that for someone who purchased a home 10 years ago, which is approximately the average tenure length for a homeowner in the U.S. in recent years, the wealth-generating benefit was nearly $225,000, because house prices had not declined annually over those ten years. A renter over that same period cumulatively lost $148,000.  

Now, in our latest data from the second quarter of 2025, even after accounting for potential equity gains from appreciation, renting makes more financial sense nationally and in most places. In fact, the national difference between renting and owning, after accounting for potential equity gains, is the highest we’ve seen since 2011. However, real estate is intensely local, and whether it’s smarter to rent or buy depends heavily on the market.

“A straightforward national comparison of median rent to median homeownership costs historically concludes that renting is cheaper. But that overlooks the primary financial benefit of owning: building equity.”

Breaking Down the Cost to Own

Calculating the cost of renting is simple – it’s the amount of rent paid every month. Calculating the monthly cost of owning a home is more complex since it includes taxes, repairs, homeowner’s insurance, the monthly mortgage principal and interest payments. In our analysis, the monthly cost of homeownership assumes the hypothetical first-time home buyer is taking out a 30-year, fixed-rate mortgage with a 5 percent down payment on a home at the 25th percentile sale price in their market in the second quarter of 2025. Finally, the monthly cost to own factors in the potential benefit of equity accumulation through house price appreciation. 

After accounting for the total monthly homeownership cost and comparing it with the median rent by market, renting was a better financial choice in all top 50 markets in the second quarter of 2025. However, once the accumulation of equity from house price appreciation is included, it was better to own in 14 of the top 50 markets. Below is a list of the 14 markets, and the premium over renting once accounting for appreciation:

• Louisville, Ky. ($503)
• Hartford, Conn. ($473)
• Buffalo, N.Y. ($465)
• Pittsburgh ($435)
• Milwaukee ($405)
• Detroit ($350)
• Cleveland ($348)
• Philadelphia ($324)
• Richmond, Va. ($268)
• Baltimore ($219)
• Chicago ($217)
• Cincinnati ($115)
• Birmingham, Ala. ($111)
• Virginia Beach, Va. ($89)

Why Rent When the House Pays You?

The graph below compares the cost of renting with the cost of owning adjusted for house price appreciation by market. The results vary widely. Take Baltimore: buying a home would cost roughly $2,355 a month, but thanks to a 4.1 percent annual house price increase (equivalent to an equity gain of about $914 per month), the net adjusted monthly cost drops to $1,440—below the median rent of $1,660. Conversely, in San Francisco, where prices fell 6 percent year over year, the monthly ownership cost of roughly $6,305 ballooned to a net $10,000 when accounting for lost equity, compared to a median rent of $2,500. While lower prices in San Francisco make it easier for a potential buyer to purchase a home, it reduces the equity benefit once you’re an owner.

So…To Rent or To Own?

House price trends aren’t static, so this type of analysis is meant to help frame the decision to rent or buy, not settle it. Right now, renting looks more financially prudent in many markets, as ownership costs remain high and equity benefits have slowed. Still, owning a home comes with forced savings and the security of stable monthly principal and interest payments—powerful advantages in an inflationary world. Not to mention, over a longer period, the cumulative benefits of house price growth outweigh the costs of paying rent. Meanwhile, renting offers the freedom to relocate without the costs of buying or selling, and the simplicity of leaving maintenance to someone else.
At the end of the day, the choice comes down to lifestyle: whether you prioritize flexibility or stability, short-term savings or long-term equity, mobility or putting down roots. It’s a deeply personal decision—only you can determine which path is right for you.

Methodology

The rent-versus-buy analysis compares monthly rental payments with the cost of ownership in the top 50 U.S. metropolitan cities. Median rent is calculated from the 2023 American Community Survey micro data, the latest year available, and extrapolated to Q2 2025 using the Zillow Observed Rent Index. Home price sales, property tax rates, and house price appreciation by market are derived from First American Data & Analytics data. Further, the monthly ownership cost is calculated by combining monthly mortgage payments, interest, taxes and insurance (PITI), assuming a down payment of 5 percent and an interest rate of 6.8 percent, which is the average for a 30-year, fixed rate mortgage in Q2 2025. Because the down payment assumed is less than 20 percent, private mortgage insurance is added to the cost of ownership at a rate of 0.75 percent of the home value. Annual homeowner’s insurance is assumed to be 0.4 percent of the home value, and annual repair costs are assumed to be 1 percent of the home value. To account for the accumulation of equity, the annual rate of house price appreciation between Q2 2024 and Q2 2025 is turned into a dollar amount based on the home sale price and divided across 12 months. This monthly equity gain (or loss) is subtracted from the monthly cost of homeownership, resulting in the house price appreciation-adjusted monthly homeownership cost.