Renting Is Cheaper Right Now (But It Does Cost You Long-Term)
Fact: In our current climate of high home prices, low inventory, and interest rates that are far above what the average borrower is paying (more than half of homeowners in the US have rates below 4%), buying is no longer cheaper than renting.
Fiction: For a long time, low interest rates meant that buying a home usually resulted in a lower monthly payment than renting. Even with rising rents, this is no longer the case across most of the country. The average monthly rent payment is lower in all 50 of the largest U.S. metro areas in 2025 than the average mortgage payment. I wish I had better news, but in Chicago, owning a home is approximately 24% more expensive than renting one, and that still makes our metro area one of the most affordable in the country.
However, a home is typically the most significant asset a person owns, and its value appreciates over time. This has been especially true recently, as we are simply not building enough housing to keep up with demand (in fact, at the current rate of building in the Midwest, it would take 41 years to meet the current demand), leading to rising home prices.
The demand for housing is not going away any time soon, and so prices will respond accordingly. For renters, that means their rents could increase each year as demand stays high, and their money will be used to pay the mortgage that their landlord has on the property. For homeowners, their monthly mortgage payments will only increase as taxes and homeowners’ insurance prices rise. However, owners also have the option to refinance their loans if and when interest rates drop, thereby lowering their monthly payments.
Does this mean it’s not worth buying right now? Homeownership is a way for buyers to build savings, as part of each monthly payment contributes to home equity, so it’s really a matter of math. Let’s say you pay $2,000 each month in rent for a 2-bedroom, 1-bathroom unit, and a similar condo can be purchased for $250,000 with a $300 HOA payment. You put 5% down with a 6.875% interest rate. It will take approximately 2 years and 2 months for you to break even on the costs of buying versus renting, considering appreciation and tax savings from deducting interest payments, as well as actual expenses. Your monthly mortgage would be around $2400, but after 2 years and 2 months, every single mortgage payment adds to your net worth, while rent payments go into your landlord’s pocket. After 5 years, you’ve spent over $126,000 on rent (since it’s likely to increase), but with equity and tax savings, your total buy costs are less than $100,000.
If you can swing the monthly mortgage payments, buying will stabilize your housing costs in the long term and help you build wealth. If you're interested in learning more about your personal rent versus buy scenario, please drop me a line. I will run a model with your personal factors in mind.
