10 Cities Where It's Still Cheaper to Buy Than Rent

Affordability has become a casualty for many aspiring first-time homebuyers, as rising interest rates and sales prices have pushed the prospective mortgage payment out of their reach.

Demand for apartments also has boosted rental prices, making it a double whammy. While renting remains more affordable than buying in most of our nation's largest metros, according to Realtor.com, in some markets, buying a starter home is still cheaper than renting an equivalent space.

Realtor.com's June rental report lists the following 10 large markets in order of the largest gap between buying and renting.

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The median rent in the Steel City was $1,583 when this data was reported in June, while the monthly median buy cost was $1,061. That gap of 33%, about $522, may well be growing here. Rents were rising faster than starter home prices at 9.4% versus 3.8% year over year (YOY), respectively.

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Birmingham was a major steel city itself and owes its initial explosive growth to that industry. Nowadays, it has a more diverse economy that includes the University of Alabama-Birmingham, one of the medical education, research, and care capitals of the South. According to the Realtor.com study, the city's median rent is $1,278, while the monthly buy cost is $900. That's a difference of $377, or 29.5%.

Realtor.com included the Illinois suburbs in its data, finding a 20.7% monthly difference between buying and renting. On average, a starter home in the Gateway to the West has a buy cost of $1,087, while the median rent is $1,371. Home prices rose 23.6% YOY, compared with a 7.5% hike in rents, according to Realtor.com's June figures.

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The median monthly rent of $1,432 in Cleveland, including its eastern suburbs, is 13.8% higher than the $1,234 average needed to buy a starter home here. That's despite a 28.4% jump YOY in home prices and only a 12.1% rise in the median rent. Cleveland is the anchor market of Northeast Ohio, which itself has more than 3.6 million residents in the Cleveland-Akron-Canton metro.

These three cities comprise the Central Maryland Metropolitan Statistical Area (MSA), home to about 2.7 million people. This metro's median household income is also usually among the nation's highest for MSAs. Realtor.com pegs the median rent at $1,820 and starter home cost at $1,656 a month. That means it's 9% cheaper to buy than rent -- despite the buy price rising 21.2% YOY and the median rent just 9.6%.

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Realtor.com included Louisville's Indiana suburbs in this market and found it 5% cheaper to buy than to rent. The city's starter home price rose 25.7% in a year, and the rent "only" 13.9%, putting the median rent at $1,253 and the starter home monthly buy cost at $1,189.

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This Atlantic Coast/Tidewater market also includes a bit of Northeastern North Carolina and is home to about 1.8 million people. Realtor.com says the starter home price here soared 43.4% in a single year but, at $1,526 a month, remains 3.5% lower than the median rent of $1,581 a month.

The starter home price raced up 31.4% YOY in the hometown of the Indianapolis 500. Rents also rose 10.9% in that period, but the $1,266 per month to buy was still 2.8% less than the $1,303 to rent a place here in the thriving Central Indiana metro.

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According to Realtor.com's data, the buy cost rose by 7.2% YOY and the rent cost by 9.1% YOY in this tri-state market (Ohio, Kentucky, and Indiana). That left a narrow gap of $14 between the median rent of $1,499 and the monthly buy cost of $1,485 in this Ohio River metro.

The slimmest margin in this list belongs to the Kansas City metro market, where a mere $13 -- or 0.9% -- separates the $1,313 monthly buy cost for a starter home from the $1,326 for the median rent. That's after a 24% jump in buying compared with a 10.2% increase in median rent YOY in this home of barbecue and fountains.

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Realtor.com's researchers analyzed listings of homes with two bedrooms or fewer, using a national average down payment of 7% and the Freddie Mac 30-year fixed rate to compare monthly buy costs against national median rent data. Median rental prices were based on units ranging from studios to two bedrooms.

Everyone's situation will be different, as will every market. Still, we hope this list provides a useful snapshot for prospective homebuyers -- and sellers -- wherever you are and whatever your story when it comes to buying or renting.

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