With mortgage rates staying high, renting Is less expensive than

The cost of housing is generally expensive across the board for Americans, whether you’re a renter or an aspiring homeowner.

While both home prices and rent have outpaced wage growth in most areas, renting can be the smarter financial choice in many markets, said Susan M. Wachter, a professor of real estate and finance at The Wharton School of the University of Pennsylvania. 

“The cost of homeownership versus renting has been made [it] daunting to become a homeowner. It’s less expensive to be a renter in most markets in the U.S.,” Wachter recently told CNBC.

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There is no one-size-fits-all answer when you’re deciding whether to buy or rent. What’s right for you will depend on factors like monthly income, outstanding debt balances and how long you plan to remain in that home, said Jacob Channel, a senior economist at LendingTree.

It’s generally cheaper to rent than own in the country’s 50 largest metropolitan areas, according to a recent study by LendingTree. Between median rent costs and median homeowner costs those with mortgages, tenants came out ahead by $563 per month in 2022.

Owning a home can help you build wealth, and after you finish paying the mortgage, owning a place will probably be cheaper than a rental, Channel said.

You also have more freedom as a homeowner that renters may not have, like the option to install new appliances, paint or do even small home-improvement projects like mount a TV to a wall, Channel explained

“If you want to paint your walls neon pink, go for it,” he said.

The costs of owning a home can be more stable compared to rent prices. Your mortgages may be fixed for up to 30 years, while the rent price for a unit could increase with each lease renewal.

Homeowners may also have more protections and options than renters do if they find themselves struggling financially.

Yet, the upfront cost of a down payment is high for most Americans, Wachter said.

“Stability is clearly an advantage to a homeowner, but the cost and the down payment can make it unaffordable,” she said. 

The median down payment for single-family homes and condos in the U.S. was $35,05 in the third quarter of 2023, according to ATTOM, a property data site. This was a 12.2% increase from $31,250 in the prior quarter.

House prices grew 7% in 2023, far exceeding both wage growth and rents, Wachter said.

Mortgage rates also remain high for potential homebuyers, spiking back to 7.06% from 6.87%; the interest rate affects the monthly cost of a home, which can make or break affordability for a homebuyer.

The median asking rent price rose to $1,964 in January, up 1.1% from a year ago, according to real estate site Redfin. While rent prices…