Despite home prices that have continued to skyrocket and interest rates creeping up, owning a median-priced house remains more affordable than renting in a slim majority of U.S. counties, accordingto a new report from ATTOM Data Solutionsthough in most large metros renting is cheaper.
In 58% of counties, the monthly cost of owning a home takes up a smaller percentage of an individuals wages compared to monthly rental costs, the report found. At the same time, in 21 out of the 25 most populous counties, renting was the more affordable option.
Home prices are rising faster than both rents and wages while wages rise faster than rents. And the housing market boom of the past decade keeps pushing home values to new records, said Todd Teta, chief product officer at ATTOM, in a statement.
Analyzing over 1,100 counties around the country, the report found a correlation between population and the relative affordability of renting versus buying. Renting (using the fair market price of a three-bedroom property) was more affordable in 69% of counties with a population of above 1 million, while ownership was cheaper in 61% of counties with populations below 500,000.
Rents have continued to rise, but have overall been outpaced by wages in a narrow majority of the counties analyzed (55%). On the other hand, home prices have outpaced wage growth in a staggering 88% of counties, meaning if these trends continue, rentals will become relatively more affordable.
Prices can only go up by so much more before renting becomes financially easier, Teta said. For now, though, rising wages and interest rates around 3% are enough to offset recent price run ups and keep ownership on the plus side of the affordability ledger compared to renting.
Where You Live
Regionally, the most and least affordable markets were no surprisethe South and Midwest are most affordable both for rentals and homeownership, while the Northeast and West are less affordable in both situations.
Out of the 50 most affordable rental markets, 43 were in either the South or Midwest. The top five most affordable counties for ownership were all in the Midwest or South, including outlier large metros (populations greater than 1 million) where ownership was still relatively affordable as far as share of monthly wages.
Those metros were:
- Wayne County (Detroit), Mich. (15.7% of average local wages needed to own)
- Allegheny County (Pittsburgh), Pa. (20.1%)
- Cuyahoga County (Cleveland), Ohio (22 %)
- Philadelphia County, Pa. (25.5 %)
- Harris County (Houston), Texas (28.9 %)
The least affordable counties for owning a home were:
- Summit County (Breckenridge), Colo. (151.3% of average local wages needed to own)
- Eagle County (Vail), Colo. (139.6%)
- Marin County, Cali. (outside San Francisco) (121.9%)
- Santa Cruz County, Cali. (112%)
- Summit County, Utah (outside Salt Lake City) (111.2%)
As far as rentals, Cleveland, Pittsburgh and Detroit all made the top five most affordable as well, making those regions some of the cheapest places to live overall. California dominated most expensive rentals, with four out of the five least affordable counties in that state.
When you are ready to buy or sell your home, please call me, Marie McLaughlin 727-858-7569.
Source:https://www.rismedia.com/2022/01/06/rents-cheaper-cities-homeownership-rural-regions/
