Owning a home is often considered the American dream — and it's an expensive one. Homeowners in all 50 states and Washington, D.C., pay from 33% to 93% more for housing each month than do renters living in the same state.
But many homeowners reap benefits that you can't get from renting, such as financial security and stability, tax deductions, and a vehicle for retirement savings.
While renting can't offer those long-term financial benefits, the study found that it's cheaper to rent on a month-to-month basis. If you're wondering how to save money for a down payment, renting can help you build that nest egg. However, in extremely expensive or competitive markets renting might be better for the long haul.
To determine the monthly homeownership premium — the additional cost of owning instead of renting, expressed as a percentage — NerdWallet compared 2015 American Community Survey data from the U.S. Census Bureau for the median gross rent and median homeownership cost in each state and Washington, D.C. Median gross rent includes the costs of monthly rent and utilities for all kinds of rental properties, and median homeownership cost includes monthly mortgage payments, real estate taxes, insurance and utilities.
This comparison doesn't include the down payment required to buy a home, which is traditionally 20% of the home price for conventional mortgages.
Owning is more expensive everywhere. Across all 50 states and Washington, D.C., it costs more each month to own a home than to rent. The median cost people pay nationwide to own a home is 54% more than the median cost of monthly rent.
In some states, the cost of owning far eclipses renting.
In Virginia it costs 48% more to own vs. rent each month!