How Much More It Costs to Own vs. Rent in Your State

Homeownership, Mortgages
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How Much More It Costs to Own vs. Rent in Your State

Owning a home is often considered the American dream — and it’s an expensive one. Homeowners in all 50 states and Washington, D.C., pay from 33% to 93% more for housing each month than do renters living in the same state, according to a new NerdWallet analysis.

But 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. The equity you build can be leveraged for loans like cash-out refinances, home equity loans and lines of credit that can be used to improve the home and boost its value or be used in financial emergencies.

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. If you’re considering buying, before entering the market, use a mortgage calculator to estimate the costs and compare mortgage rates to find the best deal.

To determine the 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. This comparison doesn’t include the down payment required to buy a home, which is traditionally 20% of the home price for conventional mortgages, but is lower for FHA or VA loans.

» MORE: Rent or buy? Calculate what’s right for you.

Key takeaways

  • Owning is more expensive everywhere. Across all 50 states and Washington, D.C., it costs more each month to own a home than to rent. The median cost people pay nationwide to own a home is 54% more than the median cost to rent each month.
  • The smallest difference is still a third more to own. The state where the premium to own a home is lowest is Florida, where it costs a median of 33% more to own than to rent. The states with the next lowest premiums are Colorado (40%) and Arizona (41%).
  • In some states, the cost of owning far eclipses renting. In New Jersey, the state with the highest homeownership premium, the median monthly cost of owning is nearly double that of renting (93%). The next most expensive places to own are Rhode Island, where the median homeownership cost is 84% higher than renting, and Connecticut, where owners pay a median of 82% more than renters each month for housing.

Scroll through the table to see the data for all states and Washington, D.C.

StateHomeownership premiumMedian monthly costs to ownMedian monthly costs to rentDifference
New Jersey93%$2,349$1,214$1,135
Rhode Island84%$1,730$938$792
Connecticut82%$2,020$1,108$912
South Dakota81%$1,225$675$550
New Hampshire80%$1,828$1,017$811
Massachusetts76%$2,048$1,164$884
Montana72%$1,316$763$553
Wisconsin72%$1,359$792$567
New York71%$2,009$1,173$836
Illinois70%$1,588$936$652
Nebraska69%$1,269$750$519
Maine69%$1,340$792$548
Wyoming67%$1,364$815$549
North Dakota67%$1,297$775$522
Vermont66%$1,530$923$607
Ohio65%$1,228$746$482
Minnesota64%$1,459$888$571
Kansas64%$1,279$782$497
Washington, D.C.63%$2,312$1,417$895
Iowa63%$1,170$718$452
Pennsylvania63%$1,414$868$546
Oregon63%$1,534$943$591
California62%$2,123$1,311$812
Washington58%$1,704$1,080$624
Missouri57%$1,200$763$437
Alaska56%$1,817$1,163$654
Texas56%$1,453$932$521
Kentucky55%$1,089$702$387
New Mexico55%$1,214$783$431
Alabama54%$1,124$729$395
Oklahoma53%$1,159$759$400
Louisiana52%$1,219$800$419
Utah52%$1,408$925$483
Idaho52%$1,170$770$400
Michigan52%$1,220$803$417
Hawaii50%$2,248$1,500$748
Mississippi50%$1,083$724$359
Maryland49%$1,909$1,278$631
North Carolina49%$1,234$827$407
Tennessee49%$1,167$785$382
Arkansas48%$1,029$695$334
Virginia48%$1,692$1,144$548
West Virginia44%$972$675$297
Indiana44%$1,089$758$331
Delaware44%$1,506$1,049$457
Georgia43%$1,299$909$390
South Carolina43%$1,168$819$349
Nevada42%$1,396$980$416
Arizona41%$1,319$933$386
Colorado40%$1,558$1,111$447
Florida33%$1,394$1,046$348

Emily Starbuck Crone is a staff writer at NerdWallet, a personal finance website. Email: emily.crone@nerdwallet.com. Twitter: @emstarbuck. Dan Tonkovich is a data analyst at NerdWallet. Email: dtonkovich@nerdwallet.com.


METHODOLOGY

NerdWallet analyzed one year of data from the U.S. Census Bureau’s American Community Survey from 2015, the most-recent data available. To determine the homeownership premium, we used the median gross rent for all rental properties and the median homeownership cost for all states and Washington, D.C., to determine a percentage that shows the added cost, as a premium, that people pay each month to own a home.