On a pure dollar basis, monthly rent costs are cheaper than monthly housing payments in 48 of the 50 most populous U.S. cities, according to a new study from Clever Real Estate, a St. Louis-based real estate company.

The analysis, which considers principal, interest, taxes, and homeowners insurance, shows that monthly home payments are more affordable than rent in only Cleveland and Pittsburgh. 

The price-to-rent ratio, calculated by dividing the median home price by the median annual rent, indicates that a ratio of 15 or less strongly favors buying, while a ratio of 21 or more strongly favors renting. Based solely on this ratio and not additional monthly costs, it's better to buy in 18 of the 50 most populous U.S. metros.

Cleveland is the best metro for homebuyers, with the lowest price-to-rent ratio (11) and home prices ($187,413) of the 50 most-populous U.S. metros. Nationally, the price-to-rent ratio sits at 14.3 — up from 13 in 2019.

The typical monthly home payment in Cleveland is $1,331, compared to $1,426 for rent, saving homeowners $95monthly, or $1,140 yearly.

In the most expensive metro, San Jose, renters save an impressive $5,598 monthly, $5,309 more than the national average of $289 monthly.

It would take over 14 years' worth of rent to afford a home outright in the typical metro area and a whopping 38 years for a home in San Jose.

The most affordable cities for home buyers based on price-to-rent ratios are:

1. Cleveland (11)

2. Pittsburgh (11.9)

3. Chicago (12.1)

4. New Orleans (12.8)

5. Memphis (12.9)

6. Birmingham (13.2)

7. Detroit (13.6)

8. St. Louis (13.6)

9. Cincinnati (13.8)

10. Indianapolis (13.9)

The worst cities for home buyers, with price-to-rent ratios over 21 are:

1. San Jose (37.6)

2. San Francisco (30.7)

3. Los Angeles (26.4)

4. Seattle (25.9)

5. Salt Lake City (25.6)

6. San Diego (24.1)

7. Portland (24.1)

8. Denver (23.2)

9. Austin (21)

Although 57% of Americans believe renting is a waste of money, the average home price nationwide has risen 39% more than the average rent over the past five years and 72% faster in the past year.

Read the full report at: https://listwithclever.com/research/price-to-rent-ratio-2024/