Kiersten Hickman, IIIerlok_Xolms/Shutterstock
When it’s time to make a move, it’s always the biggest debate: Rent, or buy? Renting would mean not having to deal with building annoyances or mortgage payments, but buying a home would mean no more landlords and having a place all to yourself. There are pros and cons for both sides, so instead, let’s look at the financial aspect of it.
Zillow, a real estate and rental marketplace website, has a thorough database when looking at rent and home prices for every state—even down to every town. It allows you to grab the median list price for houses, as well as the median monthly rent, and compare the two to see which option is the best for your next move.
To properly compare which option would be cheaper on a monthly basis, Zillow has a mortgage calculator that can see what monthly payments will look like based on home price. The median home price for every state was entered into the calculator. After considering a down payment of 10 percent, a loan program of 30-years fixed, and an interest rate ranging between 4 and 5 percent, the monthly mortgage payment was revealed.
These monthly mortgage payments were then compared to the median monthly rent prices for every state. Surprisingly, more states prefer renting over buying a home. Here are the results.
Where you should buy
Out of all 50 states, only seven of them have good prices for home ownership. The provided percentage is how much cheaper it would be per month when paying off a mortgage for a home compared to the median monthly rent price for that state.
- Illinois – 14.6%
- Maine – 20.3%
- New Jersey – 5.2%
- New York – 28.3%
- Ohio – 7.7%
- Pennsylvania – 9.1%
- Rhode Island – 12.6%
Where you should rent
After comparing the prices, 28 of the 50 states (as well as the country’s capital) have a cheaper median rent price when comparing it to the average monthly payment for a mortgage. The provided percentage is how much cheaper it would be a month to pay for rent versus a house.
- Alabama – 20.4%
- Arizona – 23.7%
- California – 11%
- Colorado – 30.5%
- Connecticut – 8.2%
- Delaware – 25.3%
- Georgia – 11.5%
- Hawaii – 60.1%
- Idaho – 34.2%
- Maryland – 6.3%
- Minnesota – 6.9%
- Missouri – 11.9%
- Montana – 55.9%
- Nevada – 28.7%
- New Mexico – 12.5%
- North Carolina – 20.7%
- North Dakota – 7.3%
- Oklahoma – 11.6%
- Oregon – 31.6%
- South Carolina – 11.1%
- South Dakota – 26.4%
- Tennessee – 9%
- Texas – 10.4%
- Utah – 42.3%
- Virginia – 12.6%
- Washington – 13.2%
- Wyoming – 45.9%
- Washington D.C. – 29%
Where the price is even
For the remaining 16 states, the difference between paying rent versus paying a monthly mortgage was too close to call. All of these states have a very small percentage difference, and when comparing the prices, it’s less than a $100 difference a month.
- Alaska – 5% cheaper rent
- Arkansas – 1.5% cheaper house payment
- Florida – 3.1% cheaper house payment
- Indiana – 1.6% cheaper house payment
- Iowa – 2.4% cheaper rent
- Kansas – 0.7% cheaper house payment
- Kentucky – 0.7% cheaper house payment
- Louisiana – 1.4% cheaper rent
- Massachusetts – 1.7% cheaper house payment
- Michigan – 3.9% cheaper house payment
- Mississippi – 0.7% cheaper house payment
- Nebraska – 1.4% cheaper rent
- New Hampshire – 2.6% cheaper rent
- Vermont* – 5.1% cheaper house payment
- West Virginia – 3.4% cheaper house payment
- Wisconsin – 2.8% cheaper rent
Decided to buy a home after all? Here are 13 great tips for new homeowners and first-time home buyers that will help you with that process. And make sure to avoid these 10 home buying mistakes!
*Since Zillow did not have a median Rent List Price, Vermont’s rent price is based on Zillow’s rent index.