Owning a home is more expensive than renting in all of America’s 100 most populous metro areas, but that doesn’t mean homeownership doesn’t make sense.

According to a new report by Creditnews Research, there isn't a single metro area where total homeownership costs, including often overlooked expenses such as taxes and insurance, are lower than rent.

Unlike most studies, which only compare rent to average mortgage payments, Creditnews Research also factored in homeowners’ insurance, property tax, private mortgage insurance, HOA fees, and renovation costs.

The metros with the smallest difference between total homeownership costs and rent are clustered in the South and Rust Belt.

In Jackson, MS; El Paso, TX; Toledo, OH; New Orleans, LA; Pittsburgh, PA; and McAllen, TX, the difference between average rents and total homeownership expenses is between $567 and $727 per month.

For many potential homeowners, that’s a good trade-off for the opportunity to accumulate equity in their homes.

Conversely, metros with the biggest rent-vs-homeownership cost difference are concentrated on the West Coast, Hawaii, and parts of the Northeast.

Homeownership is most expensive in San Jose, CA, where it costs a whopping $11,303 more each month to own versus rent.

In San Francisco, CA, the difference between rent and total homeownership expenses is $7,615 per month. The next three metros in the ranking, Los Angeles, CA; San Diego, CA; and Honolulu, HI, have a $5,000+ difference.

Mortgage costs worsen the affordability crisis

Although the report weighs more than just mortgage payments when determining homeownership costs, mortgage rates are undoubtedly a leading cause of housing unaffordability.

The Creditnews Research report found that mortgage payments alone exceed average rents in 78 of the largest 100 metros.

Mortgage rates have skyrocketed since 2022, when the Fed began raising interest rates to combat inflation. According to Freddie Mac, the average 30-year fixed-rate mortgage was 6.95% in the week ending July 3.

By comparison, rates were in the low 3% range during the pandemic, which motivated more Americans to buy homes.

This divergence has led to a phenomenon called "golden handcuffs," which deters homeowners from selling their homes because they don't want to trade in their low pandemic mortgage rates.

According to Bank of America, it could take up to eight years for this “lock-in effect” to wear off. In the meantime, housing is expected to become even more unaffordable.

“Owning a home is a status symbol. But once a status symbol becomes so expensive, people start to reject it as being something that’s worthy of striving for,” Redfin’s chief economist Daryl Fairweather told Bloomberg.

“Homeownership is becoming less of a middle-class dream and more of an aspirational dream that comes with above average wealth.”