ATTOM: Owning Home More Affordable than Renting in 2/3 of U.S. Markets
ATTOM Data Solutions, Irvine, Calif., said owning a median-priced three-bedroom home is more affordable than renting a three-bedroom property in 63 percent of U.S. counties.
The company’s 2021 Rental Affordability Report, which incorporated fair market rent data for 2021 from HUD, wage data from the Bureau of Labor Statistics along with public record sales deed data from ATTOM in 915 U.S. counties, said this happened even though median home prices have increased more than average rents over the past year in 83 percent of those counties and have risen more than wages in almost two-thirds of the nation.
“Home-prices are rising faster than rents and wages in a majority of the country,“ said Todd Teta, chief product officer with ATTOM Data Solutions. “Yet, home ownership is still more affordable, as amazingly low mortgage rates that dropped below 3 percent are helping to keep the cost of rising home prices in check.”
Teta said it is “startling” to see that kind of trend. “But it shows how both the cost of renting has been relatively high compared to the cost of ownership and how declining interest rates are having a notable impact on the housing market and home ownership,” he said. “The coming year is totally uncertain, amid so many questions connected to the Coronavirus pandemic and the broader economy. But right now, owning a home still appears to be a financially-sound choice for those who can afford it.”
Key report findings:
–Median prices for three-bedroom homes are increasing more than average three-bedroom rents in 764 of the 915 counties analyzed in this report. The most populous counties where home prices are rising faster are Los Angeles County; Cook County (Chicago; Harris County (Houston; Maricopa County (Phoenix); and San Diego County.
–Renting is more affordable than buying a home in 18 of the nation’s 25 most populated counties and in 29 of 44 counties with a population of 1 million or more (66 percent).
–Home ownership is more affordable than renting in counties with a population of less than 1 million, especially among those with less than 500,000 people. Owning is more affordable in 47, or 50 percent, of the 94 counties with 500,000 to 999,999 people. Among the remaining 779 counties with a population less than 500,000, owning is more affordable in 510, or 65 percent.
–The report shows that renting the typical three-bedroom property requires at least a third of average weekly wages in 506 of the 915 counties analyzed for the report (55 percent). The most affordable markets for renting are mostly in the South and Midwest, led by Roane County, Tenn. (outside Knoxville) (18.4 percent of wages needed to rent); Benton County (Rogers), Ark. (20.7 percent); Madison County (Huntsville), Ala. (21.6 percent); Greene County, Ohio (outside Dayton) (22.5 percent) and Sullivan County (Kingsport), Tenn. (22.6 percent).
–The least affordable for renting are mostly in the West, led by Santa Cruz County, Calif. (82.9 percent of average wages needed to rent); Santa Barbara County, Calif. (68.7 percent); Marin County, Calif. (outside San Francisco) (67.9 percent); Park County, Colo. (outside Denver) (67.5 percent) and Kauai County, Hawaii (66 percent).
–Owning the median-priced three-bedroom home requires at least a third of average weekly wages in 442 of the 915 counties analyzed for the report (48 percent).
–Wages are increasing more than average fair market rents in 739 of the 915 counties analyzed in the report (81 percent).
–Average fair-market rents are rising faster than average wages in 176 of the 915 counties analyzed in the report (19 percent. Home prices rising faster than wages in almost two-thirds percent of markets.
