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Where it makes sense to rent vs. buy

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Whether you live in an urban high-rise or on a leafy street in a suburb, where you call home matters. But knowing when to buy or rent can be a daunting task with many factors to consider. Below you’ll see data on where to buy or rent in the top 50 most populated cities and urban areas in the United States.

Mortgage interest rates, rent prices, house prices, and the buy-to-rent ratio (where a low number meant better to buy, and a high number meant better to rent) were used to calculate rankings. Check out the infographic below to see a snapshot of where to buy or rent your next home.

Download the full infographic.

One observation to note is that according to the rankings, the Midwest is the best bet for buying. Seven out of the top 10 cities are located in the Midwest, where low-interest rates and low buy-to-rent ratio numbers make for the best circumstances for house-hunters. Indianapolis, for example, is the number one place to buy because the return on investment is so much greater, compared to other populous cities, such as Miami (#50 in the Buy category). In Indianapolis, homes sell for a median price of less than $120k, whereas Miami homes are $440k on average. That is probably why Indianapolis is #47 on the Rent list—it makes more sense to pay yourself in mortgage than to pay a landlord for rent.

That being said, owning a home is a big responsibility and perhaps the largest investment a person will make in their life. Aside from just the price tag of the physical structure, there are property taxes to consider, higher utility fees, and the time, energy, and financial commitment of upkeep that must be factored in. Owning a home is not for everyone, and people who would rather pay a landlord to handle maintenance also have the freedom of temporary leasing agreement instead of being locked into a mortgage.

Other factors, like neighborhood desirability, work commute, nightlife, proximity to attractions and public transportation make renting a sound choice for many people. Mesa, AZ, where a three-bedroom apartment is $1075, is the top choice for renters because it has the nearby amenities of Phoenix, but a more affordable living rate. Seemingly, the West is best for renters, with three major cities in Arizona in the top seven for renters, and only two cities on the East Coast are in the top 10.

It’s important to factor not only what you can afford, but the quality of life you want. Having a house you love in a major city might not be so great if you are stressed about making mortgage payments. Paying rent each month may feel like throwing away money, but there is freedom in not being rooted to one place, or responsible for upkeep. Wherever it is, make your home a happy one.

Equal Housing Lender and Member FDIC

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