[jwplayer kq625qUY]
Even as home prices and rents continue to rise, a new report from ATTOM Data Solutions shows that owning a home is a better option than renting for more than half of the country.
According to ATTOM’s report, a median-priced, three-bedroom home is more affordable than renting a three-bedroom property in 53% of homes in the U.S.
The analysis found that ownership is more affordable in lightly populated counties, and renting is more affordable in more populous suburban or urban areas.
For example, renting is more affordable in 84% of counties with a population of at least one million. This includes Los Angeles County, California; Cook County, Illinois; Harris County, Texas; Maricopa County, Arizona; and San Diego County, California.
“Homeownership is a better deal than renting for the average wage earner in a slim majority of U.S. housing markets. However, there are distinct differences between different places, depending on the size and location from core metro areas,” said Todd Teta, chief product officer with ATTOM Data Solutions.
Renting is more affordable than buying a home in 94, or 69%, of the 136 counties in the report that have a population of at least 500,000 or more.
In 84% of counties with a population of one million or more, having the option to rent is an affordable alternative.
“For sure, either buying or renting is a financial stretch or out of reach for individual wage earners throughout most of the country in the current climate,” Teta said. “But with interest rates falling, owning a home can still be the more affordable option, even as prices keep rising.”
Renting a three-bedroom in California, Colorado or Hawaii required an average of 37.6% of weekly wages.
In a whopping 67% of markets, median home prices rose quicker than the price of renting did.
Consequently, the average rent rose faster than average wages in 43.3% of counties in the report.
On a more positive note, wage growth outpaced rent growth in 57% of counties, which included Harris County, Texas; San Bernardino County, California; Bexar County, Texas; Wayne County, Michigan and Philadelphia County, Pennsylvania.
Note: For this report, ATTOM Data Solutions looked at 50th percentile average rental data for three-bedroom properties in 2020 from the U.S. Department of Housing and Urban Development, along with Q2 2019 average weekly wage data from the Bureau of Labor Statistics (most recent available) and January-November (YTD) 2019 home price data from ATTOM Data Solutions publicly recorded sales deed data in 855 counties nationwide.
Rental affordability is average fair market rent for a three-bedroom property as a percentage of the average monthly wage (based on average weekly wages). Home buying affordability is the monthly house payment for a median-priced home (based on a 3 percent down payment plus mortgage payment, property tax, homeowner’s insurance and private mortgage insurance) as a percentage of the average monthly wage.
