It is a commonly held belief that a component of the American Dream is homeownership. As we’ve recently seen, America’s homeownership rate is hovering around 63%. And, we know that while owning a home is a great investment it also isn’t for everyone. To that end, the folks over at NerdWallet set out to find out how much more does it cost to own versus rent in all 50 states. To discover this monthly “homeownership premium” (the additional cost of owning instead of renting, expressed as a percentage), NerdWallet compared 2015 American Community Survey data from the U.S. Census Bureau for the median gross rent and median homeownership cost in each state and Washington, D.C. Median gross rent includes the costs of monthly rent and utilities for all kinds of rental properties, and median homeownership cost includes monthly mortgage payments, real estate taxes, insurance and utilities. Their comparison excludes the down payment.
“…many homeowners reap benefits that you can’t get from renting, such as financial security and stability, tax deductions and a vehicle for retirement savings. With each mortgage payment, you get closer to fully owning the home…”
AND
“While renting can’t offer those long-term financial benefits, it’s cheaper to rent on a month-to-month basis, the analysis found. If you’re wondering how to save money for a down payment, renting can help you build that nest egg — but in extremely expensive or competitive markets, renting might be better for the long haul.”
Key takeaways:
- Owning is more expensive everywhere
- The smallest difference is still a third more to own
- In some states, the cost of owning far eclipses renting
Click here to read the full story on NerdWallet.com.
