For decades, owning a home has been seen as the cornerstone of the “American Dream.” But in 2025, that dream is becoming harder and more expensive to achieve.
According to a new analysis from John Burns Research & Consulting, shared via TalkMarkets, the monthly cost of owning an entry-level single-family home now exceeds twice the cost of renting a comparable property. That’s the widest gap in nearly 20 years, surpassing levels seen during the 2006 housing bubble.
A Record-Breaking Cost Gap
The study calculated costs using a 30-year fixed mortgage with 5% down, factoring in:
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Principal and interest
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Property taxes and insurance
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Private mortgage insurance (PMI) when required
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Annual maintenance (0.85%–1.25% of the home price)
The results paint a sobering picture. The typical monthly payment to own is now more than double what it costs to rent and in some hot markets, the gap is even larger.
This means that a household might pay $3,200 or more to buy a starter home that would cost around $1,600 to rent. For many families, that price difference is simply unaffordable.
Where the Gap Hits the Hardest
Some U.S. metro areas are feeling this affordability squeeze more than others. The data reveals:
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Austin, TX – The most expensive city in the study, with both the largest dollar gap and highest percentage difference.
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Denver, CO -Comes second in terms of raw monthly dollar difference between owning and renting.
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Las Vegas, NV – Ranks second in percentage gap.
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Phoenix, AZ and Riverside, CA – Both stand out with major affordability challenges.
These markets share a common thread: they experienced rapid home price growth during and after the pandemic. But rents, while rising, didn’t climb at the same pace. As a result, ownership costs have outpaced rental prices dramatically.
Why Buying Has Become So Expensive
Several key factors have created this widening gap:
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Higher Mortgage Rates:
After years of ultra-low rates, borrowing costs surged. Even a modest mortgage now comes with a hefty monthly payment. -
Skyrocketing Home Prices:
Post-pandemic demand, low inventory, and investor activity drove home prices to historic highs. -
Slower Rent Growth:
While rents have increased in recent years, their growth hasn’t matched the surge in home prices and mortgage costs. -
Hidden Homeownership Costs:
Homeowners must also budget for property taxes, insurance, maintenance, and repairs expenses renters don’t shoulder directly.
The result? The “cost of entry” for homeownership is steeper than ever, pushing more people toward renting even those who once planned to buy.
What This Means for Renters and Buyers
This gap doesn’t just affect numbers on a spreadsheet it shapes life decisions. Many households that might have bought in the past are now choosing (or being forced) to rent longer.
For renters, this could mean:
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Greater flexibility with lower monthly costs
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The ability to save for a down payment more slowly and strategically
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Less financial pressure during periods of economic uncertainty
For aspiring buyers, this may mean:
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Carefully reassessing budgets and timelines
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Exploring smaller markets or different property types
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Waiting for mortgage rates or home prices to soften before making the leap
Tools to Help Make the Decision
Experts recommend using tools like the New York Times “Rent vs. Buy” calculator to model your own situation. This lets you:
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Compare your actual local rent with potential mortgage payments
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Factor in hidden costs like insurance, taxes, and maintenance
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Model how long you’d need to stay in a home for buying to make financial sense
In today’s environment, buying may not be the “default smart move” anymore and in many cases, renting can be the financially wiser choice, at least for now.
Looking Ahead: Will the Market Rebalance?
There’s hope that this affordability gap won’t last forever. If mortgage rates decline or home prices adjust, the cost of buying could eventually align more closely with renting again. But until then, many Americans are rethinking their timelines and priorities.
In some markets, we may even see a growing “renter nation” trend, where longer-term renting becomes the norm rather than a transitional stage before buying a home.
Final Thoughts
The old saying used to be: “Renting is throwing money away.” But in 2025, it might actually be the smarter financial move for many households. With ownership costs at record highs, potential buyers should make decisions with clear eyes and strong numbers — not outdated assumptions.
Whether you rent or buy, the key is understanding the full financial picture and making the choice that aligns with your goals, not just cultural expectations.
Source:
“It’s Now Twice As Expensive To Buy An Entry-Level Home Than Rent” – Mish Shedlock, TalkMarkets, August 24 2025.
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