With housing affordability at generational lows, renting a home makes much more sense than it ever has.

According to a new report by Creditnews Research, the typical American household can afford rent prices in 73 of the country’s top 100 largest metro areas.

In these cities, the average rent doesn’t exceed 30% of a household’s monthly income—a threshold set by the Department of Housing and Urban Development.

Based on the average rent-to-income ratio, the Midwest and Utah have the top 10 most affordable rental markets.

The most affordable metro is Des Moines, Iowa, where the typical household spends just 18.6% of its monthly income on rent.

The rent-to-income ratio is also below 20% in Wichita, Kansas, and Omaha, Nebraska.

Akron, Ohio, Minneapolis, Minnesota, St. Louis, Missouri, Harrisburg, Pennsylvania, and the Utah metros of Ogden, Salt Lake City, and Provo round out the top 10.

“It should be noted that the most affordable metro areas don’t necessarily have the lowest average rents,” the report notes.

“Instead, they boast the lowest rent-to-income ratio, meaning that a smaller percentage of household income goes toward rent payments.”

On the opposite side of the spectrum, the least affordable rental markets are the usual suspects.

Miami is America’s most expensive rental market—residents in this South Florida metro spend a whopping 46.6% of their monthly income on rent.

Renters are forking over 42% of their income on rent in the New York metro area and 40% in Los Angeles.

Renting is no longer ‘throwing money away’

Americans were always taught that renting an apartment was like throwing money away and that owning a home was the ticket to the American Dream.

That advice simply doesn’t apply anymore.

A separate Creditnews Research study revealed that America’s middle class can afford to buy an average home in just 52 of the country’s 100 largest metros—down from 91 before Covid.

Meanwhile, rent prices have been trekking lower for seven consecutive months on an annual basis, according to data from Realtor.com.

Rent is more affordable even when compared to buying a starter home, which is typically smaller and more affordable than the average-sized house.

“In all of the major housing markets, renting is more affordable than buying a starter home,” said Jiayi Xu, Realtor.com’s chief economist. “In the short term, renting may be a good way to save money.”

“The cost of homeownership versus renting has been [making it] daunting to become a homeowner,” Susan M. Wachter, a finance professor at The Wharton School of the University of Pennsylvania, told CNBC.

“It’s less expensive to be a renter in most markets in the U.S.”

That being said, many Americans still strive to become homeowners one day because homeownership provides a sense of “stability” for households in the long run.

The key question is how much they’re willing to pay to achieve their goal.

The biggest housing expense comes at the very beginning

With all the talk of house prices and mortgage rates, it’s sometimes easy to forget that buying a home requires a down payment.

As Realtor.com explains, most financial experts recommend a 20% down payment when buying a home. Anything below that level and buyers could be on the hook for private mortgage insurance.

The problem is, a typical down payment comes out to a whopping $84,000 with the average home selling for around $420,000.

Few Americans can afford a down payment of that size, not to mention the additional costs to close a home—which can run from 3% to 6% of the loan cost, according to Rocket Mortgage.

Renting also carries high upfront costs, such as a security deposit and broker’s fee, but it’s still much less money than a down payment.

Given the large gap between rental costs and homebuying, many renters are giving up on the idea of the traditional American Dream.

“There are renters who are simply discouraged from saving because it has become so difficult in some markets to become a homeowner,” Wachter said.

“A lot of times, people are renting, and they want to buy, and they feel stuck renting, and that is a frustrating feeling.

Simply overreaching and buying something doesn’t take that stuck feeling away,” said Sarah Mizell, a financial adviser for the Houston-based Cove Wealth Management.

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