…The price gap between renting and owning based on dollar amounts ranges from approximately 48% on the high end to 30% on the low end. With the data below, potential homeowners can make more informed choices on where to settle down and which states will stretch their pennies furthest.
- New Jersey ($2,349 vs. $1,214)
- Connecticut ($2,020 vs. $1,108)
- Washington, D.C. ($2,312 vs. $1,417)
- Massachusetts ($2,048 vs. $1,164)
- New York ($2,009 vs. 1,173)
- California ($2,123 vs. $1,311)
- New Hampshire ($1,828 vs. $1,017)
- Rhode Island ($1,730 vs. $938)
- Hawaii ($2,248 vs. $1,500)
- Alaska ($1,817 vs. $1,163)
The 5 States With the Smallest Price Gap (by dollar amount) Between Homeownership and Renting
- West Virginia ($972 vs. $675)
- Indiana ($1,089 vs. $758)
- Arkansas ($1,029 vs. 695)
- Florida ($1,394 vs. $1,046)
- South Carolina ($1,168 vs. $819)
…If it costs more to own a home than it does to rent, why do more Americans pursue homeownership over renting? U.S. households saw 63% owner-occupation, according to October 2016 U.S. Census Bureau data. The remaining U.S. households are renter-occupied, at a rate of 37% based on the same data. That ideal vision of “home” is strong enough to convince over half of all Americans to stretch their budgets in search of the yard with white picket fences, despite the hard facts working out against their favor.
All of this is in spite of the housing bubble of 2008, which left its share of casualties. Since peaking in 2004, U.S. home ownership has declined by approximately 9% as of 2016 according to Census data cited in CNBC. No generation is experiencing this more than the millennials, among whom homeownership has dropped by more than 20% in the same period. The gap between renting and owning is often too steep where a thriving job market is available, like in Washington D.C. or New York.
Nonetheless, homeownership remains at the heart of the American dream. The benefits of homeownership can far outweigh those of renting over the long haul. Owning a piece of the American dream provides a sense of financial security that renting lacks. For instance, you can tap the equity in your home to reach other financial goals, such as retirement expenses. As a renter in any state, you can pocket some of the expenses that homeowners face, such as landscaping costs, but at the greater potential cost of leaving less options open years down the road.
In all, no amount of data can overcome the perfect image of the ideal home. Property, with no outside rules, that you can change on a whim, is a strong motivator for most people to spend a little more. With the data above, perhaps potential homeowners can make more informed choices on where to settle down and which states will stretch their pennies furthest. Either way, those looking for a spot to call their own can have hope that, whether renting or buying, their residency dreams are well within their reach if they know where to look.