Homeownership comes with huge advantages. You can lock in your housing payment as an inflation hedge, customize your home however you like and Uncle Sam waives capital gains tax on the first $250,000 in profits when you sell ($500,000 for married couples).
But homeownership isn’t for everyone, and comes with its fair share of downsides. It costs a tidy sum up front in the down payment and closing costs, and the high cost to sell makes many homeowners feel locked in place for years as they wait for enough appreciation to cover the transaction costs.
Trending Now: 4 Housing Markets That Have Plummeted in Value Over the Past 5 Years
Read Next: How Middle-Class Earners Are Quietly Becoming Millionaires — and How You Can, Too
Some markets make it particularly difficult to buy. A 2025 study by SmartAsset found these five metro areas feature the lowest homeownership rates in the country — should you avoid buying a home in them?
Trending Now: Suze Orman’s Secret to a Wealthy Retirement–Have You Made This Money Move?
1. New York-Newark-Jersey City
Homeownership rate: 47.0% (Zillow)
Median home price: $795,968 (New York)
Median rent: $3,550
Rent-price ratio: 0.45%
The Big Apple comes with equally big housing costs. And as high as the rents are, home prices are disproportionately higher, with the average rent just 0.45% of the average home price.
Many young people live in New York for a few years, then move to more affordable cities when it comes time to have kids and find a larger home. But if you do want to stick around “The City” long-term, look for ways to score a bargain.
Cody Dover, owner of Little Rock Property Buyers, urges first-time homebuyers to think like investors.
“Look for distressed owners who need to sell fast, and make them a low offer,” he said. “Don’t shy away from fixer-uppers — you can score a great deal and create equity by improving the property after buying.”
Consider This: 25 Places To Buy a Home If You Want It To Gain Value
2. San Francisco-Oakland-Hayward
Homeownership rate: 49.0%
Median home price: $1,310,207 (San Francisco)
Median rent: $3,471
Rent/price ratio: 0.26%
If the difference between rents and home prices looks stark in New York, it’s even worse for homebuyers in San Francisco. Renters love to complain about the rents in the Bay Area, but they enjoy bargain housing costs compared to buyers.
“The math just doesn’t make sense for most people,” explained Adriana Trigg, owner at Legionary REI. “When monthly mortgage costs are several times what you’d pay to rent a similar space, especially after adding in sky-high taxes, insurance and maintenance, renting gives residents more breathing room to save, invest or just live without constantly stressing about cash flow.”
3. Los Angeles-Long Beach-Anaheim
Homeownership rate: 49.0%
Median home price: $984,421 (Los Angeles)
Median rent: $2,750
Rent/price ratio: 0.28%
Don’t expect a much better rent/price ratio in the City of Angels, either. The second largest city in the U.S. makes permitting and zoning a nightmare for new construction — so little new housing supply hits the market.
Ryan Hess, owner of Capstone Land Transfer, said first-time buyers need to think creatively to get their foot in the door.
“High prices and zoning challenges make it tough for many residents to own, which creates a massive and permanent renter base. So? Supplement your homeownership costs with rental income,” Hess recommended.
He urges buyers to consider house hacking: Buying either a multifamily property or a home with an accessory dwelling unit (ADU), and renting units out to subsidize your own housing costs.
4. San Jose-Sunnyvale-Santa Clara
Homeownership rate: 50.5%
Median home price: $1,530,735 (San Jose)
Median rent: $3,008
Rent/price ratio: 0.20%
The math proves even more brutal in San Jose, where the median home costs over 500 times the median rent. It just doesn’t make sense to buy there, unless you can use some of the strategies outlined above to get in at a bargain and reduce your ownership costs.
Instead, local residents should consider investing in real estate elsewhere to fill out that portion of their portfolio. That doesn’t have to mean buying out-of-state rental properties, either. Investors can buy shares in REITs through their brokerage account, invest in private equity real estate syndications or funds, or invest in private partnerships or secured notes. Check out co-investing clubs that let investors go in together in these “rich-person” investments with relatively small amounts.
5. San Diego-Carlsbad
Homeownership rate: 51.9%
Median home price: $1,033,526 (San Diego)
Median rent: $3,098
Rent/price ratio: 0.30%
At the southern end of the Golden State, rent/price ratios for buyers don’t look much better. Still, Daniel Cabrera of Fire Damage House Buyer notes that it can sometimes make sense to buy.
“Even in markets with low ownership like San Diego, home values still appreciate over the long run due to high demand and limited housing supply,” Cabrera explained. “Find an experienced real estate agent who can help you identify pockets of opportunity and avoid overpriced or underperforming properties.”
More From GOBankingRates
7 McDonald’s Toys Worth Way More Today
4 Companies as Much as Tripling Prices Due To Tariffs
Use This Checklist to See if Your Family is Financially Secure
7 Wealth-Building Shortcuts Proven To Add $1K to Your Wallet This Month
This article originally appeared on GOBankingRates.com: 5 Cities Where the Fewest People Own Homes — Is Buying There a Bad Idea?
