Top Cities Where You’re Better Off Buying than Renting

Is it possible that you can still actually save money buying instead of renting?  If you’re renting now, this reality may be hard to fathom if you’ve never done the math; but in the current economy, housing demands and trends are pushing rents higher than ever in certain parts of the country. And, according to Forbes.com, there are at least 10 cities where the renter would be better off as a buyer.

Methodology

Forbes teamed up with  Marcus & Millichap, an Encino, a California based real estate investment firm, to rate the 44 biggest cities in the U.S. using four criteria:

1 and 2) Average rent in the first quarter and how much it changed year-over-year
3) Vacancy rates, since more empty units mean more choices and usually better prices
4)  The cost of renting versus buying

Using these data, Forbes came up with the top 10 cities for renting and, more suited to our theme this week, the top 10 for buying.

Lucky Landlords

The flipside of “bad for renters”  can often be “good for owners,” especially if those owners are landklords. For instance, the Forbes study found that “With demand for housing outpacing construction of new multi-family buildings over the past few years, the home of Yale University is a great place to be a landlord. But, by our measure, it’s the worst city in the country to be a renter.” This confirms an earlier ZipCode blog, in which we presented college towns as great investments for buyers hoping to be landlords.

Top 5

In this blog, we’ll bring you the top 5 “Worst Cities to Rent in,” where buying is actually cheaper long term. To see all 10, as well as the top 10 best cities for renting, see Forbes’ slideshow here.

Worst Cities, No. 1: New Haven, Conn.

Average Monthly Rent: $1,504
Change in Rent year-over-year: 3.8% increase
First Quarter Vacancy Rate: 4.5%
Mortgage Payment v. Rent Payment: $69 cheaper to buy

Worst Cities, No. 2: New York, N.Y.’s Borough of Manhattan

Average Monthly Rent: $3,459
Change in Rent year-over-year: 4.8% increase
First Quarter Vacancy Rate: 3.2%
Mortgage Payment v. Rent Payment: $4,754 cheaper to rent

See available MLS listings in New York

Worst Cities, No. 3: San Jose, Calif.

Average Monthly Rent: $1,362
Change in Rent year-over-year: 5.3% increase
First Quarter Vacancy Rate: 3.4%
Mortgage Payment v. Rent Payment: $2,321 cheaper to rent

See available MLS listings in San Jose

Worst Cities, No. 4: Boston, Mass.

Average Monthly Rent: $1,625
Change in Rent year-over-year: 3.6% increase
First Quarter Vacancy Rate: 4.6%
Mortgage Payment v. Rent Payment: $598 cheaper to rent

See available MLS listings in Boston

Worst Cities, No. 5: San Francisco, Calif.

Average Monthly Rent: $1,720
Change in Rent year-over-year: 3.7% increase
First Quarter Vacancy Rate: 4%
Mortgage Payment v. Rent Payment: $1,906 cheaper to rent

See available MLS listings in San Francisco

Better Off Buying?

Decide if you’re ready to transition from renting to owning with help from ZipCode and ZipRealty’s Learning Center.