If you thought owning a home was cheaper than renting one, you’re right! — if you live in a state that agrees with you.
GoBankingRates studied every state’s median monthly rent and home prices. In some states, it is actually cheaper to own a home, but there are many states where owning a home is more expensive than renting one. In other states, the difference is so minimal you can do either and it wouldn’t make a difference.
Usually, buying a home is the better financial investment, but there are a handful of places where it’s not. The 11 states where it’s cheaper to rent a home are:
- Washington, D.C.
- North Carolina
It’s North Carolina that has the cheapest rent vs. own home battle, with $1,157 to rent per month (it’s $1,233 in monthly mortgage payments). Wyoming is not far behind with $1,166 in rent a month.
But mortgage payments in Wyoming are $1,174 — only an $8 difference. Over the course of a year, either you’re only saving about $96 on home payments, so it shouldn’t be a deciding factor, although this doesn’t include utilities or home repairs — which you’d be on the hook for as a homeowner. There are other states where it doesn’t really matter whether you buy or own.
Like in California, the difference between renting and buying is only $29 a month, with renting coming out as more expensive — $2,430 compared to $2,401. The gap between renting and owning has closed since this time last year when it would cost a renter $179 more per month.
If you’re looking to buy a cheap home anywhere in the country, not just your home state, head to Ohio. Median monthly mortgages are $793 here, compared to renting, where it’s $1,087 a month — the cheapest mortgages in the country. West Virginia is $796, Michigan is $848, and Oklahoma is $853 — all some of the best deals for homeowners in the country.
But what about renting a home?
Everyone thinks it’s a great time to buy a home, even as interest and mortgage rates continue to climb. But renters who should be buying are worried about down payment trouble. Most renters — 70 percent — say down payments are the biggest reason they aren’t buying a home. It’s not completely crazy, as increased home costs mean potential homebuyers will need more money up front.
As younger people are scoping out homes to buy, they find it increasingly more difficult to find something in their price range. With the cost of renting, utilities, student loans, cars, and other bills consuming most of the paychecks they earn, millennials can barely save for their retirements, let alone homes.
Unfortunately, retirement saving is so rare now that workers who do have a retirement plan with their employer forget about them when they leave the company. This could be a result of many young people not even knowing what a 401(k) is, among other important financial information they should understand. It’s sad because a lot of millennials are still living at home! So shouldn’t parents be helping kids understand these money matters? Yes, but they don’t really get much themselves.
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