At first glance, apartments appear far cheaper to rent or purchase than houses. This is because purchase price and rent is cheaper, and bills are often included in rent.
But apartments cost over double on a square footage basis compared to the average house across America.
Within this article, we dig into what’s better value for money: a house or an apartment.
Apartments are cheaper to purchase or rent compared to houses. Apartments cost less to maintain and bills are cheaper. This is because apartments are much smaller on average compared to houses. If you consider the cost of purchasing or renting on a per square foot basis, houses are much better value for money.
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Are Houses Cheaper Than Apartments?
Apartments are normally cheaper to purchase and rent compared to houses. The average price of a house within the US is $507,000 whereas the average apartment costs $319,000. Apartments are also cheaper to rent compared with houses, and bills are cheaper.
However, interestingly houses provide much better value on a per footage basis.
What about if we compare houses vs apartments per square foot?
Houses work out cheaper to buy per square foot compared to apartments. The average house per square foot is $123 whereas the average apartment per square foot is $361. Houses are also cheaper to rent per square foot compared to apartments, at $0.89 per square foot per month compared to $1.88 per square foot per month for apartments.
The average cost per square foot for a house within the US is $123. However, this varies drastically depending on the area. Detroit for example is $24 per square foot whereas you’ll pay over $800 per square foot in San Francisco. In general, smaller houses cost more per square foot. Houses in the US are large with the average house being 2,261 square feet.
The average cost to purchase an apartment (or condo) within the US reached an all time high of $319,000 in February 2022. This puts the average apartment cost at $361 per square foot.
Single-family houses cost on average $2018/month to rent. With the average square footage of houses across the US being 2261 feet, this puts the average rent at $0.89 per squarefoot per month.
The average cost to rent an apartment in the US is $1659/month. This varies greatly per state. Hawaii and states like California and New York cost renters over $1800/month. The average square footage of an apartment in the US is 882 square feet. Overall, this puts the average rent in an apartment across the US at $1.88 per square foot per month.
Are Bills Cheaper in an Apartment Compared to Houses?
Whilst apartments are more expensive per square foot compared to houses, overall they are cheaper to rent or buy. There are other costs to consider in apartments vs houses such as water, electricity, and garbage.
In most cases, rent in apartments is cheaper than in houses. When you rent an apartment, the rent covers most of the utilities.
On the other hand, when you rent a house, you’re responsible for all the utilities and any issue that happens in the house is your responsibility to fix. It’s also your responsibility to install internet and television cables.
Water bills are relative to the resident’s usage and they can increase or decrease depending on it. The size of the home also plays a factor, because the bigger it is, the more plumbing it’ll have.
Apartments are cheaper when it comes to water bills because they’re more low maintenance. Most houses have a yard, a garden, and maybe some backyard vegetables, or maybe even a pool.
All of these are factors that’ll increase the water bill even if the resident’s usage isn’t too much.
Electricity and Gas Bills
Electricity and gas bills are the biggest expense in any home. As a general rule, the bigger the house and the more people live in it, the more these expenses will increase. The house or apartment’s location plays a factor as well.
So in most cases, an apartment’s electricity and gas bills are cheaper because of its small size, but a house on the edge of the city can have affordable electricity and gas bills.
Internet Service Bills
You’ll be able to find better, affordable internet deals in apartments in the city, because you’ll find better service providers there than in houses in the suburbs.
Not to mention that the connection will be faster as well because most service providers on the edge of the city don’t offer a strong internet connection.
Garbage Pick-up Bills
Each city sets the rates for garbage pick-ups. The bills increase according to the number of pick-up times, and the density of the waste.
It’s generally cheaper for apartments because apartment residents in the city produce less waste than house owners, plus, often garbage pick-up is included within the rent.
Are Apartments Cheaper to Build Than Houses?
The cost of an apartment varies greatly depending on its location and advantages. However, as a general rule, apartments inside the city will be more costly than apartments on the edge of the city.
One major advantage of apartment living is the proximity to populous areas, such as downtown. Hospitals, shops and restaurants are likely to be far closer to apartments compared with houses.
If you don’t mind living on the edge of the city, then you’re sure to find affordable apartment options. Even more, if you have the budget for it, you can buy a piece of land and build a house on it for a decent price.
Should I Go For a House or an Apartment?
That will depend on your budget and the timing you’re willing to pay. If you go for an apartment you’ll have to take a loan, pay a lump sum and pay your EMIs over time.
However, if you go for building a house, the process will be flexible to start and pause whenever you face any financial struggles. But remember that you have to keep a close eye on the process at all times.
Factors to Consider
There are many factors to consider in renting or purchasing a home vs apartment.
Are You Looking For a Home Long Term?
Answering that question will help you decide which will be the better investment. If you’re looking for a home to settle in, then maybe you should look into houses in the suburbs to find a decent-priced house.
However, if you’re on your own and you work in the city, there won’t be a need for such an investment. An apartment would be the better pick because it’s low maintenance and offers close proximity to amenities.
Houses are, on average, over double the size of apartments. Apartments also can’t be developed on, meaning you can’t expand the space you live in. Whereas with houses, you can expand the house as your family grows.
Expenses and Budget
You have to figure out what your budget can do for you, and the expenses you’re going to handle.
For an apartment, most of the main utilities will be covered in the rent, but you’ll have to pay a certain amount of money upfront. It might even require a loan.
On the other hand, an owned house won’t need that, but all the utilities and expenses of any damage will be your responsibility. Will you be able to handle that?
Do Houses or Apartments Increase in Value More?
The value of the house will depend on two things. Its overall condition, and its location.
A house can have a perfect position in the city on the main road, and have an affordable price. But that affordable price will mean that there are issues with the house that are being compensated for with an affordable price. Anything like plumbing issues, or intense wooden creaks.
These issues will cause the house to be a temporary option for residents until they find something better. Most investors looking to own a home won’t want to deal with these issues long term.
On the other hand, a house in the suburbs in good condition can be the choice for investors who want to own a home long-term.
If they have their own car and have no problem with the drive to the city, it’ll be a good choice for settling. The pricing will be decent and they’ll get a house with no utility issues.
Apartments offer cheaper living and bills compared to houses. Apartments are also less risky structurally compared with houses since this is the responsibility of the building itself. Apartments often suit couples or single people who enjoy living close to the center of town.
Houses on the other hand are more expensive to rent or buy than apartments but are cheaper on a square footage basis. Houses also offer the option to expand as your family grows.