Is it cheaper to rent than own? Home shoppers have been asking themselves this loaded question since the beginning of modern times. The answer to this age-old dilemma is: It depends.

Generally, It Is Indeed Cheaper to Rent than Own

If you’re strapped for cash, renting is probably the smartest option. Why? Because no matter where you want to live, owning a home is almost always more expensive. In fact, a recent NerdWallet analysis shows that homeowners in all 50 U.S. states and Washington, D.C., cough up 33% to 93% more money for housing each month as compared to renters.

Of course, buying a home offers many other fiscal benefits, from financial stability to valuable tax deductions. (For more, see Top Tax Advantages of Buying a Home.) To top it off, the money you put toward a mortgage is an investment. As you continue to build equity in your home, you can take advantage of home-equity loans, cash-out refinances and other lines of credit to pay off debts or make home improvements. And in some areas it may be more difficult to find a rental home in the neighborhood, and with the amenities, that you prefer. (For more, see To Rent or Buy? There’s More to It Than Money.)

Renting a home does not offer any of these secondary financial benefits. Even so, renting is much more affordable on a month-to-month basis than owning a home, according to the NerdWallet analysis. This is particularly true in pricey, highly competitive housing markets.

Top 10 Places to Rent

NerdWallet calculated what it calls the monthly homeownership premium – the additional cost of owning instead of renting – and expressed this difference as a percentage. According to its analysis, these are the top 10 states where it’s cheaper to rent than to own a home:

  1. New Jersey When it comes to the cost of homeownership, New Jersey takes the top spot. On average, owning a home in the Garden State costs 93% more than renting. This is probably no surprise, seeing as the median home price in New Jersey is $260,000, with average closing costs of $2,168. (To give you some perspective, the median price of all homes currently listed across the U.S. is $245,000.)
  2. Rhode Island After New Jersey, the next most expensive place to own a home is Rhode Island, where the median monthly homeownership cost is 84% higher than renting. The median home price in Rhode Island is $264,000, with average closing costs in excess of $2,000.
  3. Connecticut – Some would say home prices are unconstitutionally high in the Constitution State. According to the analysis, homeowners in Connecticut pay 82% more than renters each month. 
  4. South Dakota On a monthly basis homeowners in South Dakota pay 81% more than renters.
  5. New Hampshire – Trailing just behind South Dakota is the Granite State, where the median homeownership cost is 80% higher than renting.  
  1. Massachusetts In the Bay State owning a home is 76% more expensive than renting. The capital city of Boston is particularly notorious for sky-high home prices. As of 2017 the median price of homes currently listed in Beantown is $679,000. 
  2. Montana – These days you’ll need a chest full of treasures to buy a home in the Treasure State. Homeowners pay a median of 72% more per month than renters in Montana. In fact, Zillow reports that Montana home values have soared by 5.8% over the past year and will likely rise another 2% within the next year. The median price of homes currently listed in Montana is $285,000, whereas the median rent price is $1,150. 
  3. Wisconsin – The median homeownership cost in the Badger State is 72% more than the cost of renting. 
  4. New York – Across the Empire State homeowners pay 71% more per month than renters.  Of course, that’s a state-wide percentage. In costly New York City the median price of homes currently listed is a whopping $774,950. Zillow reports that New York home values have jumped nearly 13% over the past year and could rise another 5% within the next year.
  1. Illinois Homeowners in Illinois pay a median of 70% more than renters each month. However, it’s particularly expensive to own a home in Chicago, where the median price of listed homes is nearly $290,000. In the Windy City home values have increased by 7.9% in the past year, and Zillow predicts they will rise another 3.3% in the coming year.

The Bottom Line

While there are numerous financial advantages to buying a home, renting is generally more affordable on a month-by-month basis across the nation, particularly if you live in an expensive housing market. Renting may be your best bet, financially speaking, if you’re looking to settle down in one of these 10 states. (For more, see To Rent or Buy? The Financial Issues.)