First American’s analysis compared the full monthly cost of homeownership (including mortgage principal and interest, property taxes, insurance, and maintenance) with local median rents. After also factoring in the equity potential from annual home price appreciation, renting emerged as the better option in 36 of the top 50 U.S. markets.
Yet in 14 metro areas, the benefits of ownership still outweigh renting – once expected equity gains are included. These markets include:
- Louisville, KY (+$503 ownership advantage)
- Hartford, CT (+$473)
- Buffalo, NY (+$465)
- Pittsburgh (+$435)
- Milwaukee (+$405)
- Detroit (+$350)
- Cleveland (+$348)
- Philadelphia (+$324)
- Richmond, VA (+$268)
- Baltimore (+$219)
- Chicago (+$217)
- Cincinnati (+$115)
- Birmingham, AL (+$111)
- Virginia Beach, VA (+$89)
Appreciation effectively “pays down” part of homeownership costs in these cities, according to Kushi. For example, Baltimore’s estimated monthly ownership cost is $2,355. But with house prices rising at 4.1% annually, equivalent to $914 in monthly equity gains, the net cost of owning drops to $1,440, which is below the local median rent of $1,660.
Meanwhile, in high-cost, high-volatility markets like San Francisco, owning carries steep downsides. With prices falling 6% year-over-year, a typical monthly mortgage cost of $6,305 inflates to a net $10,000 once lost equity is factored in, far above the city’s median rent of $2,500.
The same effect is playing out in other pricey metros where price declines have turned what was once a long-term wealth-building strategy into a financial drag for recent buyers.