Rent vs buy in Rhode Island
Today's numbers over 7 years put renting ahead in 3 of the 4 cities of 50,000+, while 1 is a toss-up.
Rhode Island cities: rent or buy
| City | Verdict | 7-year result | Break-even (up to 30 yrs) | Typical home | Rent /mo |
|---|---|---|---|---|---|
| Providence | Rent | renting wins by $6k | year 8 | $431,740 | $2,190 |
| Cranston | Rent | renting wins by $29k | year 11 | $454,927 | $2,092 |
Sources: Zillow Home Value and Observed Rent indexes. Verdicts come from our rent vs buy method, which uses 20% down over 7 years.
Rhode Island, our take
Across its 4 cities of 50,000+, Rhode Island leans toward renting. Over 7 years, renting wins in 3 and 1 comes out a toss-up. Buying takes time to pay off at a $509k typical home value. Warwick comes out a toss-up, with only $3k between the two after 7 years. A typical home there costs $420,635, or you pay $2,235 a month to rent, and you break even in year 7. In Providence, monthly rent of $2,190 against a $431,740 home puts renting ahead by $6k over 7 years. Break-even comes in year 8.
Where rent is low compared with home prices, you wait longer. Cranston has a typical home at $454,927, with rent running $2,092 a month. Over 7 years, renting comes out ahead by $29k, and you won't break even until year 11. Not even the cheapest of the 4 cities gives you a quick win. A $399,302 typical home plus $1,866 monthly rent means renting stays ahead by $21k over 7 years in Pawtucket, and you break even in year 10.
As an owner, yearly costs weigh on you too. As an owner, you pay a 1.21% property tax, higher than the 0.94% US rate, and $1,566 a year for homeowners insurance, compared with $1,308 nationwide. For all renters, the median rent is $1,342 a month, under the $1,413 US mark. Roughly 36% of households are renters, equal to 160,568 renter households, near the 35% US level. Even so, if you stay put, we still see strong price growth. Home prices gained 8.1% a year in the last 10 years, with 5% each year over the long term.
Our take: unless you actually stay put for 7 to 11 years, renting is favored in Rhode Island. Rent your place and hold onto the savings if you might move sooner.