The Convergence of Renting and Buying

Why Real Estate Math is Changing in America's Most Prosperous Cities

For decades, the math spoke with one voice. Renting cost far less than buying in most American cities. But the latest Realtor.com report for June 2025 explains that the financial edge is beginning to be chipped away in ways no one could have imagined. The result is a new market for renters and buyers alike and an interesting point to revisit the actual cost of home.

While the national median asking rent remains $1,711 for 0 to 2-bedroom apartments 2.1 percent lower than a year ago the gap between the cost of renting and the cost of a mortgage payment is narrowing in much of the country. In 37 of the 50 largest U.S. metropolitan areas, renting remains cheaper, but only just. And in some markets, the gap is narrowing quickly.

Leasing Remains Cost-Effective but Not as Much as Before

The statistics are instructive. Through June, the typical U.S. renter saves $908 a month versus buying a starter home still a sizeable sum, but not as high as the $956 saved a year ago. That $48 difference might not be stunning, but it's an instructive trend. Home prices are still high and mortgage rates are still high, but even so, in most markets, ownership costs are no longer increasing further and further in excess of rent as they used to.

Some of that is because while rent rates have stabilized with declines in all unit sizes buying costs are slowly readjusting. Studios, one-bedrooms, and two-bedrooms are down by 2 to 2.6 percent from last year. But ownership costs in most cities are also starting to decline, especially in those that overbid during the pandemic.

Austin Leads the Country Where Leasing Saves the Most

Austin, Texas continues to lead the nation in rent-preferred cities. There, the median monthly rent is $1,467 and the cost of buying a comparable property is $3,150. That is a gap of 114 percent or $1,683 per month the largest gap among the large metros.

It is the same case in San Francisco, Seattle, and Los Angeles, where renting is still lower by $1,700 to $2,600 per month. Even in New York and Boston, where real estate is always in demand, the cost of owning per month is 70 to 90 percent higher than renting.

But here is the twist. The same cities are now witnessing the rent advantage dwindle. In San Jose, while last year's renters were saving $2,614 over buyers, that advantage has fallen by $349. That monthly advantage in Austin is lowered by $292. Seattle renters are saving $210 less than they did in June 2024.

Purchasing Is Catching On in Large Metros

Although renting is still the standard in almost every city, there are a few markets finding that buying the wiser financial choice. The only major city where purchasing a starter home is still cheaper than renting is Pittsburgh. But others are likely to join it soon as the numbers change.

In Memphis, the balance finally shifted this year. It's more affordable to rent than to buy a flip from last year. It's one of a series of metros where rent savings are rising, not falling.

Renters in Birmingham, Alabama, wound up saving $189 last month compared to last year. Milwaukee, Oklahoma City, and Baltimore also saw rental increases rise compared to 2024, highlighting the very localized character of the market.

A Complex Scenario for Luxury Buyers

For affluent and educated consumers contemplating the purchase of a second home, investment property, or new primary residence, the arithmetic is more complicated. In upper-end markets like San Diego and Boston, the rent-vs.-buy differential continues to favor renters, but most purchasers are not motivated by thrift alone.

Considerations such as lifestyle, location, long-term appreciation, and individual equity objectives usually come first. And in those markets, a softening in the rent-vs.-buy spread can be seen as a potential opportunity. Price reductions, extended days on market, and increasing inventory can build the setting in which high-net-worth purchasers can make better bargains in markets where renting once constituted a better cash package.

What This Means for the Housing Market

As Realtor.com Chief Economist Danielle Hale puts it, the affordability landscape is shifting. Even after nearly two years of rent stabilization, home prices and mortgage rates are staying flat. That has kept renting more affordable in most markets, but that benefit is no longer the same.

In one sense, this changing environment would be a boon to both buyers and renters. Renters have found some stability following a decade of record-breaking increases. This may lead buyers to start noticing that their way to homeownership lengthens as savings through renting decreases and more sellers come back to the market.

The secret to success for both types of groups is awareness. Being aware of how local trends are unfolding and how national changes impact local markets can assist home buyers of every ilk in making better choices.

Looking Ahead to the Second Half of the Year

 As summer turns into autumn, market watchers are holding their breath for the next chapter. Are home prices going to keep declining in pandemic boomtowns like Austin and San Jose? Are rents going to stabilize and begin rising, or not? And how will interest rates keep affecting the numbers? For now, at least, one thing is sure. While renting is still dominant in most cities, the gap is narrowing. In a real estate market marked by extreme volatility, that might be the most important reading yet. Whether you're considering buying, leasing, or investing, the time has come to examine these projects closely. The rent-vs.-buy math is no longer a formula that always applies. It is a evolving story and one that deserves close attention from anyone seeking not only shelter, but strategy.

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