Renting vs Buying Across the Country

Back in the day, buying a house was standard. In 2025, real estate is very different: home prices and interest rates are high, the economy is uncertain, and the market is competitive. Is buying a house right for you, and is this the right time? We share the key factors in the rent vs buy decision in different areas of the country.

Rent vs Buy: Pros and Cons for Each Option

Renting a Home in 2025

Continuing to rent a home is a good option for many people. It gives you flexibility to move if you need to, has lower upfront costs, and leaves you with fewer responsibilities. On the downside, you’re not building equity in a home, you can’t make major changes to the space, and you have limited control over rent increases.

Buying a House in 2025

Buying a house is a longer-term investment that allows you to build equity with every mortgage payment. The historical rise in home values shows that buying a house is still a solid investment strategy. When you buy, your monthly payments stay predictable as long as you have a fixed-rate mortgage. You also have control over your residence and can make changes or even rent part of it out.

The 5% Rent vs Buy Rule

The 5% rule of rent vs buy is a simple way to compare buying a house and renting a home. This rule assumes that the unrecoverable cost of owning a home (maintenance, property taxes, opportunity cost of the down payment) is about 5% of the value of the home annually.

If the rent for a comparable home in the same area is less than 5% of the home’s value, it makes sense to rent vs buy. Here’s an example of how the rule works for a $400,000 home:

• 5% of $400,000 = $20,000 annually or $1,667 monthly.
• If rent is less than $1,667/month, renting a home makes more financial sense in the short term.
• If rent is more than $1,667/month, consider buying a house.

Keep in mind that this rule is a crude measure and is most useful in the short-to-medium term. For a longer-term outlook, consider all the pros and cons of each option. Also, try a rent vs buy calculator for guidance that takes additional factors into account.

Rent vs Buy Across the Country

The rent vs buy decision can depend on your location. In some areas of the country, it makes more sense to rent, while in others, buying is the better option.

Buying vs Renting in Chicago

Chicago is one of the more affordable big cities for buying a house, especially when compared to coastal cities. Property values in Chicago are relatively stable with moderate appreciation. Good public transportation makes the city more livable. On the downside, property taxes in Chicago are quite high compared to urban centres in other states.

Renting a home in Chicago also has plenty of advantages, including the ability to move from one of the city’s vibrant neighborhoods to another one without having to sell. Because property values are relatively low in Chicago, rent is also lower than in many large cities.

Renting vs Buying in Seattle

Homes in the Seattle area have seen steep price appreciation, driven in part by the city’s active tech-related job market. Buying a house in Seattle means getting in on a high appreciation market, but the cost of entry may be too high for some would-be homeowners.

Renting a home in Seattle is also pricey, but suitable if you don’t plan to stay there long term. If you need the flexibility to move, consider renting.

Renting vs Buying in New York City

NYC has some of the highest home prices in the country, as well as other significant barriers to buying a house. Renting is often the more practical choice, but keep an eye on rising neighborhoods if you do have enough for a down payment.

Buying vs Renting in Los Angeles

In LA, housing prices remain high, but rental prices have also increased. Buying a house in LA may be worthwhile if you want to build equity and put down roots in a specific neighborhood. But if you’re unsure where you want to live, renting gives you the flexibility to move when it’s right for you.

Buying a Condo vs Renting an Apartment

Comparing renting a home to buying a house isn’t only about single-family homes. You might also be deciding between buying a condo and renting an apartment.

Buying a condo allows you to build equity while still enjoying an urban lifestyle and on-site amenities. As long as interest rates don’t dramatically increase, your housing costs are fixed when you buy a condo, and there are some tax advantages to owning rather than renting.

Renting an apartment means fewer upfront costs and the flexibility to relocate. With an apartment, you also don’t need to worry about HOA fees, which can increase substantially over time. HOA politics are another hassle you won’t need to worry about if you rent.

Using a Rent vs Buy Calculator

If you’re trying to make the rent versus buy decision, use a comprehensive rent vs buy calculator. Make sure it includes these variables:

• Down payment and closing costs
• Mortgage payments
• Rental rates
• Property taxes, insurance, and HOA fees
• Maintenance and repairs
• Utilities (these are often higher for homeowners)

Note that a rent vs buy calculator focuses on the financial side. You should also consider the non-financial aspects in the rent vs buy decision, including how long you plan to live in the home and whether you’re willing to take on the added responsibilities of home ownership.

Making the Rent vs Buy Decision

Housing is the biggest part of most people’s budgets, so making the right decision can affect your finances in both the short and long term. It’s a serious decision. Here’s how to make the decision based on all the facts:

Run the Numbers

Use multiple rent vs buy calculators. Be realistic about the figures and use conservative estimates for pricing and property appreciation.

Assess Your Priorities

What’s important to you at this stage in your life? Do you want to earn a return on your investment? Is your focus on lifestyle flexibility? Do you want the stability and control of home ownership? Are you willing to invest time and money in home maintenance and landscaping?

Consider Market Variables

Some market conditions favor buying over renting, and others make renting the more sensible choice. What are the local market conditions? Is it a buyer’s market or a seller’s market? Are interest rates on the rise, or are they relatively low?

Rent vs Buy

Make the decisions based on the numbers, but also on how you want to live your life and what your plans are for the near term as well as the long term. Don’t fall for common misconceptions about renting, such as “renting is throwing money away” and “buying is always the better investment.” These solutions are not one-size-fits-all. Think through your options carefully, and you will make the decision that’s right for you.