Comparing Home Prices and Affordability Between Two Cities: A Step-by-Step Framework
A worked worksheet for two markets: which four numbers to pull, from which dated source, and how a price gap turns into a monthly and five-year figure.
By Maren Vickery · Oct 06, 2026 · 10 min read
Comparing two cities on headline median price alone will mislead you. A $100,000 price gap can shrink to a $129 monthly gap once property tax rates, down payment size and closing costs are in the same spreadsheet — and it can also flip the other way. This guide gives you the four metrics to pull, the rule for dating them, and the arithmetic to run once you have them.
The City A / City B figures used below are placeholder values chosen to demonstrate the math. They are not readings for any real market. Pull your own from the sources named in the table, all for the same month, then rerun every step with your numbers.
Side-by-Side Market Data
One rule governs this table: both columns must come from the same source, for the same month, on the same definition. A median price for one city from a brokerage report and the other from a county assessor file are not comparable, and neither are a trailing-three-month median next to a single-month median.
The City A and City B columns below are placeholder values used for the arithmetic in the next section. Replace them with figures you pull yourself.
| Metric | City A (placeholder) | City B (placeholder) | Source to use — same date for both columns |
|---|---|---|---|
| Median sale price, all home types | $400,000 | $500,000 | Redfin city market data, which reports median sale price and its year-over-year change for cities such as Austin, TX and Denver, CO as of August 2026 (Redfin, 2026-08) |
| Median price per square foot | $210 | $280 | Redfin, trailing-three-month price per square foot with year-over-year change (Redfin, 2026-08) — use the trailing-three-month median sale price alongside it so both cities are on the same window |
| Effective property tax rate | 1.8% of price | 0.6% of price | County assessor or tax collector for each city; note the assessment year and any homestead cap, which varies by state |
| Mortgage rate used | 6.00% (placeholder) | 6.00% (placeholder) | Freddie Mac Primary Mortgage Market Survey weekly 30-year fixed average, week of October 1, 2026 — the same release also publishes the 15-year average, the prior week's 30-year and 15-year figures and the year-earlier figures (Freddie Mac, 2026-10-01) |
| Loan terms assumed | 20% down, 30-yr fixed | 20% down, 30-yr fixed | Your own assumption — keep it identical across columns |
| Loan amount | $320,000 | $400,000 | Calculated |
| Monthly payment (P&I + tax + insurance) | $2,669 | $2,798 | Calculated — see next section |
| Cash to close (down payment + 3% costs) | $92,000 | $115,000 | Calculated; actual closing costs vary by state transfer tax and title practice |
| Homeowners insurance assumed | $150/mo | $150/mo | Quotes for the specific address; varies sharply by wind, hail and wildfire exposure |
| Median asking rent | $1,900/mo | $2,500/mo | One rent source covering both cities, same month |
| Speed of market | Fill in | Fill in | Redfin reports average days on market against the prior year, and average offers per home sold over the trailing three months, for markets including Austin (Redfin, 2026-08) |
Two cautions. First, an automated valuation — a Zestimate or any AVM — is a model output, not the market value or appraised value of a home; use published market medians for city comparison and an agent's comparable analysis or an appraisal for a specific property. Second, if either side is a condo, add HOA dues to the insurance line, because lenders count them in your debt-to-income ratio.
Cost of Living and Affordability Comparison
Run the same seven steps on both columns. Every number below comes from the placeholder table above.
- Loan amount. City A: $400,000 × 0.80 = $320,000. City B: $500,000 × 0.80 = $400,000.
- Principal and interest, 30-year fixed at the 6.00% placeholder rate. The payment factor at 6.00% over 360 months is $0.0059955 per $1 borrowed. City A: $320,000 × 0.0059955 = $1,919/mo. City B: $400,000 × 0.0059955 = $2,398/mo.
- Property tax. City A: $400,000 × 1.8% = $7,200/yr = $600/mo. City B: $500,000 × 0.6% = $3,000/yr = $250/mo.
- Insurance. $150/mo in both columns (placeholder).
- Total monthly. City A: $1,919 + $600 + $150 = $2,669. City B: $2,398 + $250 + $150 = $2,798. The $100,000 price gap becomes a $129/month gap — 4.8% more per month in City B, not 25% more.
- Cash to close. City A: $80,000 down + $12,000 (3%) = $92,000. City B: $100,000 + $15,000 = $115,000. Gap: $23,000.
- Five-year total outlay. City A: (60 × $2,669) + $92,000 = $160,140 + $92,000 = $252,140. City B: (60 × $2,798) + $115,000 = $167,880 + $115,000 = $282,880. Gap: $30,740.
Now adjust for what you actually get. At $210 and $280 per square foot, $400,000 buys about 1,905 sq ft in City A and $500,000 buys about 1,786 sq ft in City B. To match 1,900 sq ft in City B costs 1,900 × $280 = $532,000, not $500,000 — redo steps 1 through 7 at that price if square footage is the thing you are holding constant.
Rent vs buy, City B. Compare rent against the non-equity cost of owning, because principal repayment is not spending. Year-one interest on $400,000 at 6.00% is roughly $23,852, about $1,988/month. Non-equity cost = $1,988 interest + $250 tax + $150 insurance = $2,388/month, against $2,500 rent. Owning costs $112/month less. Break-even on the $15,000 in closing costs: $15,000 ÷ $112 = 134 months, about 11.2 years. That figure ignores maintenance, HOA dues and the cost of selling, all of which push the break-even later.
Rent vs buy, City A. Year-one interest on $320,000 at 6.00% is roughly $19,082, about $1,590/month. Non-equity cost = $1,590 + $600 tax + $150 insurance = $2,340/month, against $1,900 rent. Owning costs $440/month more on cash flow alone, so there is no cash-flow break-even at these inputs — the 1.8% tax rate, not the price, is what does it.
These results are specific to the inputs. Change the loan type and they move: FHA adds mortgage insurance premiums, VA adds a funding fee but no down payment, and a jumbo loan may carry a different rate and a larger minimum down payment than the 20% assumed here.
Bottom Line: Which Option Fits Your Situation
The comparison does not produce one answer. It produces an answer per horizon and per cash position. Three common cases, using the numbers above:
You expect to move again within three years. Thirty-six months is far short of the 134-month break-even calculated for City B, and City A costs $440/month more to own than to rent on a non-equity basis. At these inputs the data favors renting in either city and buying in neither. Short horizons are also where transaction costs dominate: the $12,000 to $15,000 in closing costs is spent whether or not prices move, and nobody can tell you what a resale price or time on market will be.
You expect to stay seven to ten years. Eighty-four to 120 months is still under the 134-month break-even in City B, though not by much — and that break-even is sensitive to the rent assumption. If the gap between rent and non-equity owning cost in your real figures is $250/month rather than $112, the break-even on $15,000 drops to 60 months and a seven-year stay clears it comfortably. Run step 7 with your own rent number before deciding. In City A, the 1.8% tax rate means a seven-year stay still does not produce a cash-flow break-even at these inputs; the case for buying there has to rest on something else, such as payment stability or getting 1,905 sq ft instead of 1,786.
Your cash is the binding constraint. With $95,000 available, City A's $92,000 to close works and City B's $115,000 does not. Your options in City B are a smaller down payment — which raises the loan, the payment and usually adds mortgage insurance — or a cheaper property than the $500,000 median. Before assuming the smaller down payment is fine, recompute steps 1, 2 and 6, because the $129/month gap widens quickly when the loan grows.
One more horizon check before you act on any of this: the rate in your spreadsheet. The Freddie Mac weekly survey for October 1, 2026 publishes the 30-year and 15-year fixed averages together with the prior week's and the year-earlier readings (Freddie Mac, 2026-10-01), so you can see how far the input has moved and rerun steps 2, 5 and 7 at the current figure rather than a stale one. And treat all of this as a screening tool — a licensed agent in each market, a lender quoting on your actual credit profile, and a tax professional on state-specific property tax and homestead rules will change the numbers in ways a two-column comparison cannot capture.
Frequently asked questions
Why is the cheaper city not the cheaper monthly payment?
Because taxes are charged as a rate on value, not a flat amount. In the table, City A's 1.8% effective rate on $400,000 produces $600/month in property tax, while City B's 0.6% on $500,000 produces $250/month. That $350/month tax difference absorbs most of the $479/month difference in principal and interest ($1,919 vs $2,398), leaving a total gap of just $129/month.
Should I compare median price or price per square foot?
Both, because they answer different questions. In the table, $400,000 at $210/sq ft buys about 1,905 sq ft in City A, and $500,000 at $280/sq ft buys about 1,786 sq ft in City B. If you need the same space, price City B at 1,900 × $280 = $532,000 and rerun the payment math, which raises the loan above the $400,000 used in step 1. Pull both metrics for the same window — Redfin reports price per square foot and median sale price on a trailing-three-month basis with year-over-year change (Redfin, 2026-08).
How much does a change in mortgage rates move these numbers?
At the $400,000 City B loan, moving from the 6.00% placeholder to 6.25% raises principal and interest from $2,398 to about $2,463 — $65/month, or $3,900 over five years. On the $320,000 City A loan the same quarter point adds about $52/month. Rerun step 2 using the Freddie Mac 30-year fixed weekly average for the week of October 1, 2026, which that release reports alongside the prior week's and the year-earlier averages (Freddie Mac, 2026-10-01), and separately at the 15-year average from the same release if you are considering a shorter term.
Do days on market and offers per home change the comparison?
Not the payment math — $2,669 vs $2,798 holds regardless of how fast homes sell. What those metrics change is the price you are likely to pay relative to list, and therefore whether the $400,000 and $500,000 medians are realistic targets. Redfin publishes average days on market against the prior year and average offers received per home sold over the trailing three months for markets including Austin (Redfin, 2026-08); pull the equivalent for both of your cities, for the same month, before treating either median as your budget.
Can I use a Zestimate or other online estimate for the two columns?
No. An automated valuation is a model output for one address and is not the same thing as market value or an appraised value, so it does not belong where a city median sits. The table uses city-level medians from one source dated to the same month for comparison, and for the specific home you eventually target you need a comparable sales analysis or an appraisal — which is also what the lender will underwrite the $320,000 or $400,000 loan against.
Sources
- Redfin — Austin, TX Homes for Sale & Real Estate (2026-08)
- Redfin — Denver, CO Homes for Sale & Real Estate (2026-08)
- Redfin — Austin Housing Market: House Prices & Trends (2026-08)
- Freddie Mac — Mortgage Rates - Freddie Mac (Primary Mortgage Market Survey) (2026-10-01)
Written by
Maren Vickery
Maren shapes the publication's voice on housing markets and neighborhood change. She's drawn to the gap between how listings describe a place and how it actually feels to live there. Her editing favors plain language over jargon.
