Transitioning from renting to buying a home is a major financial milestone. But rising prices have made home buying more challenging for millions of Americans. The Federal Reserve Bank of St. Louis says that the median home sales price increased 30% between the first quarter of 2020 and the first quarter of 2022, reaching $428,700. And rents are shooting upward as well. Zumper’s National Rent Report shows that the median rent for a one-bedroom apartment rose 13.2% between April 2021 and April 2022, while two-bedrooms spiked 14.6% during the same period.
With home and rent prices rising, SmartAsset calculated the price-to-rent ratios for 50 of the largest cities nationwide. Generally, a lower price-to-rent ratio means conditions are more favorable for buying a home and a higher price-to-rent ratio means renting is favorable. According to Trulia’s Rent vs. Buy Index, the specific thresholds are as follows: a price-to-rent ratio of 1 to 15 indicates that buying is more favorable, a ratio of 16 to 20 indicates that renting is typically more favorable and a ratio of 21 or more indicates that renting is more favorable. For more details on our data sources and rankings, check out the Data and Methodology section below.
This is SmartAsset’s 2022 study on the price-to-rent ratio in the 50 largest U.S. cities. Read the 2021 edition here.
- Buying in California is significantly more expensive than renting. Seven of the 10 cities with the highest price-to-rent ratios are located in California. The average sales price of homes in these seven cities was a whopping $916,071. A year’s worth of rent, meanwhile, averaged $27,233.
- San Francisco, California is home to the highest average rent in our study, while Tulsa, Oklahoma has the cheapest rent. Across one- and two-bedroom apartments, the average monthly rent in San Francisco is $3,263. At the other end of the spectrum, renters in Tulsa pay an average of only $822 per month.
- Price-to-rent ratios in the Midwest are low. Five of the 10 cities that are most favorable for homebuyers are located in the Midwest. They include Detroit, Cleveland, Milwaukee, Chicago and Indianapolis. Detroit is the most favorable city for homebuyers relative to renters, with a price-to-rent ratio of only 5.82.
Cities With the Highest Price-to-Rent Ratios: Where Renting Is More Favorable Than Buying
1. San Jose, CA
San Jose, California has the highest price-to-rent ratio of the 50 large cities that we examined. Between March 2021 and February 2022, the average price of a home in this Bay Area city was $1,261,667, second-highest across our study. While San Jose also had the fifth-highest average annual rent during that same time period ($2,494), a typical home still costs 42.16 times more than a year’s worth of rent.
2. San Francisco, CA
Nowhere in our study was the average sales price of a home higher than California's San Francisco, where homes sold for an average of $1,461,917 between March 2021 and February 2022. While the city also had the most expensive average rent in our study, an average home still cost 37.34 times more than a year’s worth of rent ($39,152).
3. Long Beach, CA
Located just south of Los Angeles, Long Beach, California has the third-highest price-to-rent ratio, at 33.23. Between March 2021 and February 2022, homes sold for an average of $757,500 (eighth-highest), while a year’s worth of rent was $22,798 (11th-highest).
4. Seattle, WA
The fourth West Coast city in our top 10, Washington's Seattle has a price-to-rent ratio of 33.13. During the 12-month time period that we examined, homes sold for an average of $780,917 (sixth-highest). Meanwhile, the average annual rent during the same time period was $23,569.
5. Oakland, CA
On average, homes in Oakland, California sold for $885,167 between March 2021 and February 2022. During that same period, the average annual rent was $27,683 (ninth-highest), which gives the city a price-to-rent ratio of 31.98.
Cities With the Lowest Price-to-Rent Ratios: Where Buying Is More Favorable Than Renting
1. Detroit, MI
No city has more affordable homes than Detroit, where the average sales price was just $75,667 from March 2021 through February 2022. With rent averaging $1,084 per month, the average home is just 5.82 times more than a year’s worth of rent.
2. Cleveland, OH
Cleveland, Ohio has the second-lowest average home sales price ($118,750) and the 21st-lowest annual rent ($15,682). The city’s price-to-rent ratio is 7.57, making it the second-most affordable place to buy a home compared to renting.
3. Baltimore, MD
In Baltimore, Maryland, the price-to-rent ratio is roughly 12. From March 2021 through February 2022, the city had the 14th-lowest median home value ($179,100) and the 19th-lowest annual rent ($13,080).
4. Milwaukee, WI
Milwaukee, Wisconsin has a price-to-rent ration of 13.79, thanks in part to relatively affordable homes. The average sales price of a home in Milwaukee between March 2021 and February 2022 was $175,667 (third-lowest), while the average annual rent was $12,743 (11th-lowest).
5. Philadelphia, PA
The City of Brotherly Love has the fifth-lowest price-to-rent ratio (14.03) of the 50 cities we studied. Homes in Philadelphia sold for an average price of $261,083 between March 2021 and February 2022. Meanwhile, the average rent during the same time period was $18,611 per year, or $1,551 per month.
Data and Methodology
To find the cities with the highest and lowest price-to-rent ratios, we examined average home sales prices and annual rents for 50 of the largest cities in America. We divided the average homes sales price for each city by its average annual rent to calculate the price-to-rent ratio and ranked the cities according to this figure. The city with the highest price-to-rent ratio is the most favorable for renters, and the city with the lowest price-to-rent ratio is the most favorable for homebuyers.
Data for average home sales prices comes from Redfin and is for March 2021 through February 2022. Data for average annual rents comes from Zumper and is for March 2021 through February 2022.
We used Trulia’s Rent vs. Buy Index as guide for specific price-to-rent ratio thresholds: a price-to-rent ratio of 1 to 15 indicates that buying is more favorable, a ratio of 16 to 20 indicates that renting is typically more favorable and a ratio of 21 or more indicates that renting is more favorable.
Tips for Deciding Whether to Buy or Rent
- Work with a professional. A financial advisor can help you determine which is best for you and your family by examining and analyzing your full financial situation. Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
- Use our calculator. SmartAsset designed a digital tool to help you determine whether to buy a home or rent one. Give our rent vs. buy calculator a try today.
- Ask yourself these two questions. Blaine Thiederman, a certified financial planner, said prospective homebuyers should ask themselves how much of their income is needed to cover their mortgage payments and how long they plan to live in their new home. “If the monthly payment (principal, interest, taxes, insurance and HOA) is over 28% of your pre-tax salary, you cannot afford to buy the house you want to buy,” said Thiederman, founder of Progress Wealth Management, a financial planning firm based in Arvada, Colorado. Meanwhile, if you plan to live in your home for less than two years, Thiederman says buying a home might not be worth it after factoring in closing costs, real estate fees and maintenance.
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