ATTOM: Buying Still More Affordable than Renting in 66% of U.S. Markets

Rents and home prices are rising faster than wages in a majority of U.S. housing markets, said ATTOM Data Solutions, Irvine, Calif.

The company’s 2017 Rental Affordability Report showed buying a home is more affordable than renting in 66 percent of U.S. housing markets. The analysis incorporated recently released fair market rent data for 2017 HUD, wage data from the Bureau of Labor Statistics along with public record sales deed data from RealtyTrac in 540 counties with at least 900 home sales in 2016.

“While buying continues to be more affordable than renting in the majority of U.S. markets, that equation could change quickly if mortgage rates keep rising in 2017,” said Daren Blomquist, senior vice president with ATTOM Data Solutions. “In that scenario, renters who have not yet made the leap to homeownership will find it even more difficult to make that leap this year. Additionally, renting may end up being the lesser of two housing affordability evils in a growing number of high-priced markets.”

The report said making monthly house payments on a median-priced home–including mortgage, property taxes and insurance–is more affordable than the fair market rent on a three-bedroom property in 354 of the 500 counties analyzed.

Among the nation’s most populous counties, those where it is more affordable to buy than to rent are Cook County (Chicago); Maricopa County (Phoenix); Miami-Dade County; San Bernardino County in inland southern California; Clark County (Las Vegas); Tarrant County, Texas; Wayne County (Detroit); Broward County, Fla.; Bexar County (San Antonio), Texas; and Philadelphia.

Counter to the overall trend, renting is more affordable than buying a home in 186 of the 540 counties analyzed, including Los Angeles County; Harris County (Houston; San Diego County; Orange County, Calif.; Kings County (Brooklyn); Dallas County, Texas; Queens County, N.Y.; Riverside County, Calif. King County (Seattle); and Santa Clara County (San Jose), Calif.

On average across the 540 counties analyzed, monthly fair market rent on a three-bedroom property in 2017 will require 38.6 percent of average wages, while a monthly house payment on a median-priced home (including mortgage, property taxes and insurance) requires 36.6 percent of average wages.

Least affordable rental markets requiring the highest percentage of average wages to pay fair market rent in 2017 are Marin County, Calif. (77.3 percent); Spotsylvania County, Va. (73.7 percent); Monroe County (Key West), Fla. (72.2 percent); Honolulu County, Hawaii (70.7 percent); and Maui County, Hawaii (70.6 percent). ATTOM reported 55 counties where the average fair market rent on a three-bedroom property in 2017 will require more than 50 percent of average wages.

Most affordable rental markets requiring the lowest percentage of average wages to pay fair market rent in 2017 are Madison County (Huntsville), Ala. (23.9 percent); Allegheny County (Pittsburgh), Pa. (24.4 percent); Fulton County (Atlanta), Ga. (24.8 percent); Anderson County (Knoxville), Tenn. (25.1 percent); and Rock Island County, Ill. (25.3 percent). Seventy-five counties where the average fair market rent on a three-bedroom property in 2017 will require less than 30 percent of average wages.

The report said on average, fair market rents for three-bedroom properties in 2017 are rising 4.2 percent compared to 2016 while median home prices in 2016 were up 5.7 percent from a year ago and average wages were up 2.2 percent from a year ago in the second quarter of 2016 (the most recent wage data available). Fair market rents are rising faster than average wages in 337 of the 540 counties analyzed (62 percent). Counter the national trend, average wage growth is outpacing growth in fair market rents in 203 counties.

ATTOM said median home prices in 2016 rose faster than average wages in 427 of the 540 counties (79 percent. Average wage growth outpaced home price appreciation in 113 markets (21 percent. Median home prices are rising faster than fair market rents in 340 counties; fair market rents are rising faster than median home prices in 200 counties (37 percent.