Rent or buy? We explain how to make that decision in today's real estate market

By Emily Lorsch —

Renting or buying has never been an easy decision, and this ever-changing real estate market isn't making it easy.

With soaring mortgage interest rates, record home prices and rents, a potential economic downturn, and other lifestyle considerations, there's a lot to keep in mind.

"This is an extraordinarily unique market, due to the pandemic and the mass housing, so

," says Diana Olick, weather and real estate correspondent for the CNBC.

According to the figures, renting is usually cheaper.

On average, across the 50 largest US metropolitan areas, a median renter pays 40% less per month than a first-time homeowner, based on requested rents and monthly mortgage payments, according to Realtor. com.

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In December 2022, it was more profitable to rent than to buy in 45 of those metropolitan areas, according to the real estate site.

This figure is higher than the 30 markets of the previous year.

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How does this translate in terms of monthly costs?

In the top 10 metro regions that favored renting, the monthly costs of

But this has not turned out to be so for everyone.

Leland and Stephanie Jernigan recently bought their first home in Cleveland for $285,000, about $100 per square foot.

The family of seven will also welcome Leland's mother, who has been battling breast cancer.

By their calculations, this move—which triples their space and allows them to take care of Leland's mother—will save them more than $700 a month.

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"You don't buy a house for its price"

“You don't buy a house for its price,” says Olick.

“You buy it based on the monthly payment that is going to be principal and interest and insurance and property taxes.

If that calculation works out for you and it's not a large part of your income, maybe a third, then it's probably a good bet, especially if you expect to stay in that house for more than 10 years.

In the long term you will accumulate equity in the house, and

.

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Mortgage interest rates fell slightly in early March, due to stress on the banking system from recent bank failures.

They are rising again, although they are currently not as high as they were last fall.

The median rate on a 30-year fixed-rate mortgage was 6.59% in April, up from 3.3% on the same date in 2021.

But that hasn't slowed demand significantly.

“As markets have bubbled in certain parts of the country and other parts of the country have depreciated, we have seen a lot of investors come in looking for affordable homes that they can buy and rent,” said Michael Azzam, a real estate agent and founder of The Azzam Group in Cleveland.

“We continue to see relatively high demand,” he added, “prices have continued to appreciate even with interest rates where they are.

So we continue to see a fairly active market."

Buying a home is part of the American Dream

The Jernigans are achieving much of the American Dream.

Buying a home is a life event that 74% of those surveyed by Bankrate in 2022 considered the best indicator of prosperity, above even having a career, children or a university degree.

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For Leland, who grew up in East Cleveland, where his family received public benefits, the purchase is also a turning point.

“I came from a single mother home who struggled to put food on the table and always wanted better for her children... There were more criminals than police... Not the kind of neighborhood I wanted my children to grow up in Jernigan recounted.

The new owner also wants to build a better future for other children.

Jernigan plans to buy houses in his old neighborhood, renovate them and create a safe space for those who grow up like him.

“I am here because someone saw me and saw the potential in me and gave me advice that helped me.

... and I just want to give it back to someone else," Jernigan said.