Are you spending more to drive than to live? As rent prices in major cities fall, some Americans may now pay more in monthly car payments than in housing costs. According to Experian, the average new car payment is $749; however, accounting for gas and insurance pushes the monthly ownership costs of a car to over $1,000.
Yet young car buyers are still drawn to new vehicles. Between April 2024 and March 2025, Americans aged 18-34 bought 1.1 million new cars, accounting for 9.9% of vehicle registrations in that age group.
Those opting for a used car will get some financial relief. The average monthly car loan payment is $529 for used cars, but with insurance costing between $2,000 and $4,000 annually, drivers of all vehicle types might be overspending on their commute. An unintended consequence of this is delayed homeownership for car-dependent renters.
Zoocasa analyzed median one-bedroom rental prices in 100 cities and compared those to the average monthly cost of owning a new car, including gas, insurance, and car loans, to see the real cost of driving. In most cases, renters will find that a new car is a roadblock to homeownership.
The Cities Where New Cars Cost More Than Rent
When your car costs rival those of rent, it might be a sign to reevaluate your financial priorities. This is particularly true if you live in one of the 26 cities where average monthly new car costs are higher than the one-bedroom rent.
In Jacksonville, Albuquerque, Tucson, and San Antonio, new car costs are as much as $100 more than rent. In more car-dependent cities like Baton Rouge, Wichita, and El Paso, the difference between monthly car payments and monthly rent exceeds $200.
But even in cities where rent is higher than car ownership, car costs are catching up to rent. In 10 cities, such as Cincinnati and Milwaukee, monthly car ownership costs are only $100 behind those of rent. If rent costs continue to decrease, it might only be a matter of time before car costs overtake rent.
Many renters might not realize how much money goes towards their car. To better put it into perspective, consider that in Phoenix, 88% of the monthly rent is covered by new car expenses. Phoenix renters who opt for public transit, a used car, carpooling, or cycling could speed up their down payment savings timeline by redirecting some of the $1,102 in new car expenses.
This could be especially helpful for renter households with two adults. As the majority of U.S. households have more than two cars, with 37% having two cars and 22% having three cars or more, cutting back to just one car could be an effective way to free up more of your income.
High Rent + High Car Costs = Delayed Homeownership
The 50/30/20 budgeting rule suggests that only 50% of your income be spent on needs, 30% on wants, and 20% on savings and debt. But if transportation and housing expenses are eating up your budget, you’ll have less money to put towards other financial goals, like homeownership.
Take a look at Los Angeles. The median one-bedroom rent is $2,250, and new car ownership costs come in at $1,146, totalling $3,396 per month for housing and transportation. According to the Bureau of Labor Statistics, the average monthly wage is $6,350, meaning a Los Angeles renter will spend 53% of their income on housing and transportation alone, leaving little room for wants and savings.
It’s an even more extreme story in Miami. The average monthly wage is lower at $5,525, but rent and car ownership costs are higher, accounting for 68% of the monthly income. This puts Miami renters in a difficult position, forcing them to prioritize between long-term financial goals and their daily living costs.
But few can live a car-free lifestyle. Even in cities with good public transportation systems, car ownership is high. In New York, 70% of households own a car, whereas in Miami and Los Angeles, the figure is even higher, at 92%. Our car-dependent society means some renters may need to choose between getting to work and getting a home.
How Rethinking Your Budget Could Accelerate Your Homebuying Timeline
Becoming a homeowner today requires strategic planning and, oftentimes, sacrifice. While cutting back on your daily latte habit might help save you a few dollars a year, it’s the bigger expenditures that really eat away at your savings capabilities.
Taking a hard look at your budget and seeing where trade-offs are possible can help you better plan for the future. Are there vacations you’re willing to postpone until after purchasing a home? Will cutting back on everyday luxuries like clothes and food delivery get you closer to your down payment goal?
While living a car-free lifestyle might not be realistic for everyone, opting for a used car could save thousands of dollars a year. In less car-dependent cities, particularly New York and Chicago, using public transportation for a year or two could similarly help accelerate your down payment savings timeline.
The bottom line is that saving for a home requires careful financial planning. It won’t happen by accident. With the cost of living rising in almost all aspects of life, becoming a homeowner requires creative budgeting and cutbacks. But the good news is that with a smart savings strategy and a little dedication, homeownership is possible.
Are you ready to start looking at homes? Zoocasa has thousands of up-to-date listings to help you get started on your homebuying journey. Start browsing today!
