HONOLULU (KHON2) — The housing affordability crisis has made it very hard for families in Hawaiʻi to switch from renting to buying a home.
With the current home prices and mortgage rates, owning a home can cost up to $10,000 more per month than renting in some areas. Why is that?
Most rent-vs-buy comparisons only consider mortgage costs, but owning a home includes many other expenses.
Creditnews Research compared average rent prices with the true cost of owning a home in America’s 100 biggest cities. They included all costs like insurance, taxes, HOA fees and renovation expenses to give a clearer picture.
Their key findings
Owning a home is more expensive than renting in all of America’s 100 biggest cities.
The cost difference between owning and renting varies a lot across the country. It can be as high as $11,303 in San Jose, CA and as low as $567 in Jackson, MS.
The highest homeownership costs compared to renting are mainly on the West Coast, in Hawaiʻi and parts of the Northeast.
The smallest cost differences are in the South and Rust Belt regions.
In 22 cities, mortgage payments alone are cheaper than renting, but remember to include all housing costs.
Where it makes sense to buy
Some cities have a smaller cost difference between renting and owning because of lower home prices.
The difference in these cities is less than $900, making it a good tradeoff for building equity in a home.
Cities with the largest cost difference
The city with the largest difference between average rent and total housing costs is San Jose, CA. Residents there pay $11,303 more each month to own their homes. Even though rent in San Jose is high ($3,360 per month), it’s still much cheaper than owning a home. Other expensive cities in California include San Francisco, Los Angeles, San Diego, and Oxnard, with homeownership costs $4,961 to $7,615 more than renting.
Outside California, Urban Honolulu has one of the highest homeownership costs compared to renting in the country.
Renting vs. homeownership in Honolulu
In Urban Honolulu, owning a home is much more expensive than renting. The high property prices, plus extra costs like insurance and taxes and even condominium fees, make renting a more affordable option for many families. Mortgage payments in Honolulu exceed the average rent by at least $1,000 a month.
Biggest savings for homeowners
There are 22 cities where mortgage payments are lower than average rent payments, such as New Orleans, LA; Jackson, MS; El Paso, TX; Chicago, IL; Syracuse, NY; and Pittsburgh, PA.
While owning a home can be more expensive than renting, the actual costs vary greatly depending on the city. It’s important to consider all expenses when deciding whether to rent or buy.