It’s still a better deal to buy than rent a home in 75 of the biggest cities in the US

• Many Americans still struggle with the financial decision of whether to rent or buy a home.
• Realtor.com says homeownership is a better option in about three-quarters of the US 100 largest cities.
• Fort Myers, Florida, ranks as the top market to buy rather than rent.

In an economy where housing affordability is falling, homeownership may still be your best bet.

In January, the average price of a home increased 14% from the previous year, while rents climbed 12%, reaching a new high. As rent prices and monthly mortgage payments rival, many Americans will struggle with the decision of renting or buying this year, according to a new report from Realtor.com.

"Right now, it's sort of the big question of the year," George Ratiu, Realtor.com's manager of economic research, told Insider. "We obviously saw home prices shoot up last year as a result of the under supply, and rents are now rising by double digits." 

Homeownership is an asset for wealth building, while renting allows more financial flexibility. However, affordability is declining for both forms of housing, leaving many to question which is the better financial decision. For those who are conflicted, data suggests that buying a home is still the most affordable option in 75 of the 100 largest cities across the country.

"If the down payment is large enough and they plan to live in the house for three to five years, buying would absolutely be a better financial decision," Ratiu said.  

Rent prices have surpassed mortgage payments in several cities

Home price growth is expected to return to more modest levels in 2022. That's a contrast to the rental market, where prices are projected to continue climbing for the foreseeable future.

In December, the average price for homes listed on sale was $375,000, according to Realtor.com. At the same time, the typical renter paid $1,651 on average, eclipsing the typical mortgage payment of $1,407, assuming buyers put down at least 10% on their home. 

Realtor.com claims that in about three-quarters of the 100 largest metropolitan areas it tracks, homeownership remains the better financial option. This is because mortgage payments are stil often cheaper than renting, but homeownership provides buyers with greater equity, allowing them to build greater personal wealth in the long run.

The markets where it's more affordable to buy than rent 

Housing affordability varies in each market, but several cities offer potential buyers a greater advantage to renters.

Realtor.com calculated the median rents of homes in the 100 largest metropolitan areas it tracks by evaluating monthly costs associated with a 30-year fixed-rate mortgage. The real estate database determined that homebuyers in Fort Myers, Florida, San Antonio, Texas, and Scranton, Pennsylvania, are getting the most bang for their buck.

In Fort Myers, Florida, which Realtor.com ranks as the top market to buy rather than rent, homeowners can expect to pay $444,450 for the typical home, with an average mortgage payment of $1,796. In the same city, renters are paying on average $4,005 a month. The disparity is attributed to a dearth of available units, which has created a vacuum in the market. "Even if you wanted to rent something, the probability of getting a rental is pretty low," Mike Lombardo, a broker with Old Glory Realty told Realtor.com.

Although renters in San Antonio and Scranton have more rental options, they face a similar reality as rents also surpass mortgages in these cities. In San Antonio, renters are paying on average $3,178 each month, while renters in Scranton are dropping $2,156 for the typical rent payment. Mortgages in both cities sit considerably lower, amounting to $1,414 and $715 each month, respectively. 

"Last year we saw really pretty staggering rent growth," Chris Salviati, senior housing economist at Apartment List told Realtor.com. "That level of rent growth is not something we had experienced at any time in recent pre-pandemic history."  According to the rental listing website's rent index, rents jumped 18% in 2021 and many renters will remain burdened throughout 2022.

As home prices and rents are likely to continue growing this year, Americans concerned with affordability may want to stick to buying after all.