While some economic moves might have prospective homebuyers thinking about jumping into the market, even coming mortgage rate drops and lower home prices might not be enough to make some cities more affordable for buyers. Renting may remain the cheaper option.
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Real estate agents and experts offered their predictions for the cities where it’ll be cheaper to keep renting in 2026 than to buy.
Understanding the Formula
Fred Loguidice, a real estate expert and the founder of Sell My House Fast Indianapolis IN, looks beyond just the mortgage payment when determining what constitutes “cheaper.” He invokes the total monthly housing cost (TMOC), a calculation that includes principal and interest (P&I) on a 6.5% interest rate, and the “three T’s” of homeownership: taxes, insurance and HOA maintenance.
“In the following markets, the TMOC is over twice the median rent, the financially smart choice for anyone who won’t be occupying the home for five or seven years or longer,” he said.
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San Jose, California
San Jose is “the embodiment of the ‘cheaper to rent’ school of thought,” he explained, noting that the cost of entry is “staggering.”
With the median price of a home projected to hold steady at around $1.45 million and the median rent on a three-bedroom unit at around $3,300, the price-to-rent ratio is a whopping 36.6, he said.
Now bring in the TMOC: With a 10% down payment and a fixed 6.5% rate, the P&I by itself will cost over $8,200 per month. Adding property taxes (around 0.7%) and insurance, the total monthly cost easily tops $10,000.
The “cash flow gap” between owning and renting is a steep $7,000 per month. “This gap is so large that even a projected 4% decline in home prices in 2026 won’t close it, especially since rent growth here is expected to be negligible,” he explained.
Miami
In Miami and coastal Florida, the “cheaper to rent” calculation plays out more in the condo and older high-rise market, which Loguidice said, “is a colossal share of the inventory.”
For a typical-priced condo at around $420,000, the P&I may be manageable, but it “is blown out by the insurance and assessment spikes,” he said, largely due to the region’s disaster-prone conditions.
“Florida’s property insurance market is in chaos. Owners are being charged homeowner (and/or) master policy premiums of two to four times the national average on a yearly basis,” he explained.
On top of this, new state laws are requiring structural milestone inspections and fully funded reserves that are hitting older buildings hard.
Renting a class A apartment in an up-to-date, fully compliant building will cost around $2,600, while owning an older, roughly same-sized condo may cost a TMOC of $3,800 to $5,000 per month, he explained.
“Renting eliminates this unquantifiable, disastrous assessment risk completely.”
Austin, Texas
While Texas is often cheaper overall compared to other parts of the nation, in Austin, home values increased by 40% since the pandemic, while rents rose more modestly, according to Ben Mizes, a real estate agent and president at Clever Real Estate.
“Property tax rates averaging 1.7% to 2% (among the highest in the nation) and insurance costs rising with storm risk add to ownership’s expense.” In contrast, new multifamily construction is adding rental supply, helping to keep rent growth in check.
Seattle
This crown jewel of the Pacific Northwest is still a coveted spot, Mizes said. Median home prices are still hovering around $850,000, and you’ll likely pay around $2,400 a month for a two-bedroom rental, he explained.
“Add high upkeep costs and rising insurance rates, and renting is by far the cheaper option especially for those without a 10-plus year outlook.”
In expensive metros with rising property taxes and insurance costs, renting remains the financially flexible option compared to buying, even through 2026, Mizes concluded.
Los Angeles
In Los Angeles, the median rent ranges from $2,500 to $3,800 per month, compared to ownership costs of approximately $6,900 for a million-dollar home, according to Stacy Brown, VP of property management enablement, at Real Property Management, a Neighborly company.
“New buyers in California pay today’s tax base, plus they face rising insurance challenges and rising owners’ association fees.”
Phoenix
Though Arizona has long been attractive for its lower home costs, rising numbers of retirees have driven up costs. Now, the median rent hovers between $1,640 and $1,900 per month, Brown said, while ownership costs are comparatively higher, ranging from $2,750 to $2,950 per month.
“Renting still wins in Arizona, because although property taxes are low, ownership still costs $1,000 or more each month than renting.”
For investors and property managers, the current housing environment “reinforces the long-term strength of rental demand, as renters recognize the financial benefits of renting and are likely to remain renters for longer,” Brown said.
Renting Is Cheaper but Doesn’t Grow Equity
Loguidice offered a caveat about this debate between renting and buying, however, saying, “It is crucial that readers understand this is a cash-flow analysis, not a long-term wealth plan.” Because while renting saves you monthly dollars, “you miss out on the wealth-building benefit of principal reduction and long-term tax-free growth.”
Additionally, his calculations factor in a 10% downpayment, but if you can put down more, it’s possible to bring some places into reach, he said.
If you’re dealing with a cash-flow issue, renting may make the most sense. If you have savings reserves and a down payment already saved up, then it may make sense to buy.
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This article originally appeared on GOBankingRates.com: Real Estate Agents Predict Which Cities Will Be Cheaper To Rent Than Buy in 2026
