Try telling those renting in Miami that they're throwing away money. They'd argue that renting, on average, is much cheaper than buying these days — $1,080 a month to rent compared to $1,767 a month to pay down a mortgage. What's more, new construction is up 40 percent this year, practically guaranteeing that rent will remain relatively low.
That's enough to make Miami No. 2 on our list of the best cities to rent a home. It tied with Denver and Milwaukee, Wis.; Tucson, Ariz., wasn't far behind.
They boast conditions that may be driving more Americans to choose tenancy over homeownership.
Topping this year's list is Orlando, Fla.
While the number of owner-occupied homes in the first quarter of 2008 (75 million) is virtually flat from the first quarter of 2007, renter-occupied units have increased by nearly 3 percent to 35.7 million, according the U.S. Census Bureau.
In a soft market, possible home buyers may choose to rent instead of paying a down payment, for fear of losing money on their investment. Others may have trouble saving enough for a down payment.
Tom Brink, vice president and co-leader of the residential sector at global design practice RTKL, based in Dallas, says that Millenials — or children of the baby boomers — aren't earning enough to buy up existing inventory.
"Unlike their parents, who bought up condos a few years back with luxury amenities, this generation is still being paid entry-level salaries," says Brink. "They can't afford a down payment on a home."
Other than the money it saves folks initially, renting has other advantages. For one, maintenance fees are included in each monthly outlay, which means there is no need to hire a plumber if the toilet overflows.
What's more, the hidden costs associated with buying a home, such as condominium association fees and annual upkeep, are factored out.
To compile our list of the best cities for renters, we considered three measurements in the country's 40 largest metropolitan areas: the annual change in monthly rent, the percent increase of new rental construction in 2008, and the percent difference between the area's average monthly rental payment and the average monthly mortgage payment (assuming that the down payment was 10 percent and the fixed interest rate is 6.25 percent). All rental data was supplied by Encino, Calif.-based real estate brokerage firm Marcus & Millichap. Mortgage data was provided by the National Association of Realtors, a trade group based in Washington, D.C.
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