15 Cities Where It's Better to Rent Than Buy

stock image of diamond head ...
ShutterstockThe median rent is down more than 5 percent year-over-year in Honolulu.
By Catherine Sherman

As a renter, it's easy to feel pressure to buy. Owning a home means you can start building equity and cash in on tax breaks. But in some parts of the country, it can take quite a while to break even on a home purchase, making it more financially advantageous to rent for a few years.

Based on Zillow's breakeven horizon -- the number of years it takes before owning a home makes more financial sense than renting the same home -- here are the top 15 cities where renting rules.

SAN JOSE, CALIFORNIA

Breakeven horizon: 2.5 years
Zillow Rent Index: $2,664
Annual change in Zillow Rent Index: 5 percent

If you have the option to rent or buy the same San Jose home, renting could be a smart option because it takes 2.5 years for buying to be more financially advantageous. The median home value is currently $671,800, up 16.2 percent year-over-year. Rents have also increased but not as much, making it a great time to snag a rental.


SEATTLE

Breakeven horizon: 2.5 years
Zillow Rent Index: $2,043
Annual change in Zillow Rent Index: 7 percent

It's also a great time to rent in Seattle if you don't plan on owning the same home for more than 2.5 years. While home values aren't appreciating quite as fast as in San Jose, they're still seeing double-digit growth with a 10.3 percent increase since this time last year. Seattle's median home value is currently $441,500.


DENVER

Breakeven horizon: 2.6 years
Zillow Rent Index: $1,648
Annual change in Zillow Rent Index: 8.3 percent

With the Zillow Rent Index up 8.3 percent year-over-year, Denver can feel pricey for renters. But for a couple of years, sending in a rent check each month could beat the costs associated with buying a home in the Mile High City. It currently takes 2.6 years for buying to make more financial sense than renting the same Denver home.


SAN FRANCISCO

Breakeven horizon: 2.8 years
Zillow Rent Index: $3,602
Annual change in Zillow Rent Index: 4.4 percent

The San Francisco real estate market has seen double-digit growth over the past year, with the median home value up 15.1 percent. If you don't plan on staying put for about three years, however, you're better off renting and investing some of the money you could spend on a home purchase to earn interest elsewhere.


COLORADO SPRINGS

Breakeven horizon: 2.8 years
Zillow Rent Index: $1,254
Annual change in Zillow Rent Index: 1.5 percent

Colorado Springs is a good place to rent if you aren't ready to settle down for more than three years. The housing market is strong there, with the median home value up 4.5 percent year-over-year to $195,300. However it still takes 2.8 years for buying to beat renting.

phoenix apartment complex pool
ZillowPhoenix is the most affordable of the top cities for renters. Starting at $1,081, a two-bedroom apartment in this complex comes with access to several community amenities including a pool and volleyball court.


PHOENIX

Breakeven horizon: 2.8 years
Zillow Rent Index: $1,089
Annual change in Zillow Rent Index: 2.3 percent

The Phoenix for-sale market is also strong with the median home value up 10.9 percent since this time last year. If you might move in the next 2.8 years, though, it makes more financial sense to rent than buy. The good news is the median rent is currently $1,089 - the lowest of any city on this list.


MESA, ARIZONA

Breakeven horizon: 2.8 years
Zillow Rent Index: $1,149
Annual change in Zillow Rent Index: 3.2 percent

Mesa, AZ rounds out the four-way tie for cities where renting beats buying if you plan on moving in the next 2.8 years. The median Mesa rent is currently $1,149 per month, while the Zillow Home Value Index is $172,500.


MINNEAPOLIS

Breakeven horizon: 3 years
Zillow Rent Index: $1,491
Annual change in Zillow Rent Index: 3 percent

The median Minneapolis rent increased 3 percent over the past 12 months, while the median home value is up 6 percent year-over-year. It takes three years to break even on a home purchase, making renting a favorable option for many residents. A median home costs around $187,800 to buy or $1,491 per month to rent.


ALBUQUERQUE

Breakeven horizon: 3.1 years
Zillow Rent Index: $1,181
Annual change in Zillow Rent Index: 2.3 percent

The Albuquerque market not only leans toward renting, but it's also affordable for renters. It currently costs $1,181 per month to rent a median-priced home. The median home value, meanwhile, is $182,300 and expected to increase 2.3 percent by next year.


NEW YORK

Breakeven horizon: 3.2 years
Zillow Rent Index: $2,192
Annual change in Zillow Rent Index: 4.3 percent

Perhaps unsurprisingly, it also takes more than three years to break even on an real estate purchase in New York. If you want to try living in different parts of the city during that time, renting is a good option. You can expect a median rent of $2,192 per month. While on the pricey side, current market conditions have made renting in Boston or San Francisco equal to or more expensive than renting in the Big Apple.


BOSTON

Breakeven horizon: 3.3 years
Zillow Rent Index: $2,458
Annual change in Zillow Rent Index: 3.3 percent

It makes more financial sense to rent than buy in Boston, unless you plan to stay put for at least 3.3 years. Either way, Boston is a hot market: The median home value rose 8.4 percent, and the median rent rose 3.3 percent over the past 12 months.


VIRGINIA BEACH, VIRGINIA

Breakeven horizon: 3.5 years
Zillow Rent Index: $1,534
Annual change in Zillow Rent Index: 0.8 percent

The median rent in Virginia Beach increased by only 0.8 percent year-over-year, which is great news for renters. The breakeven horizon there is 3.5 years, so you may be better off renting a home than buying for that time period.


WASHINGTON, D.C.

Breakeven horizon: 3.5 years
Zillow Rent Index: $2,453
Annual change in Zillow Rent Index: 0.3 percent

Washington, D.C., ties for the third best city for renting unless you plan to own a home for 3.5 years. The median rent is currently $2,453, a 0.3 percent increase since last year. The median home value is also up 14.4 percent to $454,900.


SAN DIEGO

Breakeven horizon: 4.2 years
Zillow Rent Index: $2,223
Annual change in Zillow Rent Index: 4.3 percent

San Diego may see a few more sun worshipers choosing to pay month-to-month. With a breakeven horizon of 4.2 years, renting beats buying in the near-term. Existing homeowners are also seeing strong market growth with the median home value up 12.3 percent year-over-year.


HONOLULU

Breakeven horizon: 6.8 years
Zillow Rent Index: $2,276
Annual change in Zillow Rent Index: -5.4 percent

In tropical paradise, renters rule. It takes 6.8 years to break even on a home purchase in Honolulu, so finding a place to rent at or below the median rent of $2,276 is a smart move. In fact, the median rent is down more than 5 percent year-over-year, so now is a great time to sign the lease on your dream beach rental.

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