Rent vs buy in Tennessee
Over 7 years, today's numbers put renting ahead in 13 of 18 cities of 50,000+, while buying leads in 4, with 1 city a toss-up.
Rent vs buy in Tennessee's cities
| City | Verdict | 7-year result | Break-even (up to 30 yrs) | Typical home | Rent /mo |
|---|---|---|---|---|---|
| Clarksville | Rent | renting wins by $19k | year 11 | $317,914 | $1,372 |
| Hendersonville | Rent | renting wins by $77k | year 23 | $515,384 | $1,651 |
| Spring Hill | Rent | renting wins by $45k | year 14 | $518,832 | $1,966 |
Sources: Zillow Home Value and Observed Rent indexes, plus verdicts from our rent vs buy method, using 20% down over 7 years.
The Tennessee viewpoint
Over 7 years, home prices grew faster than rent, so renting wins in 13 of Tennessee's 18 biggest cities. Statewide, a typical home is worth $331k, and median rent runs $1,189 a month, compared with $1,413 a month in the US. In Nashville, buying runs $425,889 and renting costs $1,820. Renting comes out ahead by $24k, and break-even doesn't arrive until year 11. A $913,277 home in Franklin rents for $2,038. Renting saves you $204k, and buying never catches up in 30 years.
Buying wins in 4 cities, where the math flips; in 1 city the gap is just $3k. For Memphis, buying a home sets you back $151,794, while rent comes to $1,259. Year 3 brings break-even for buyers, who lead by $36k over 7 years. Jackson shows the same result. For a $220,277 home, rent of $1,418 means buying puts you $25k ahead and pays off in year 4.
Once you own, low state bills help you out. Your property tax comes to 0.50%, well below the US 0.94%. You pay $1,292 a year for homeowners insurance, versus $1,308 a year in the US. Even so, prices rose 8.5% a year across the last 10 years, faster than the long run rate of 4.7% a year. Renters make up 33% of households today, or 933,708 homes, close to the US 35%.
Our take: in Tennessee, we suggest letting the local price tag make the call. If a city is cheaper and you plan to be there 3 or 4 years, buy. In a pricey market, rent.