In a recent report, ATTOM revealed more Americans are opting for homeownership in place of leasing due to skyrocketing rental prices. In the 2022 Rental Affordability Report, the nation’s premier property database showed a median-priced home is more affordable than renting in 58% of the counties analyzed despite rising home prices.
The building industry and homebuyers continue to experience a unique market experience in the ongoing aftermath of the COVID-19 (coronavirus) pandemic. Limited inventory and an increasing desire for single-family housing created a housing inferno not only in the Atlanta market but across the country. Many renters strive to become homeowners for the added benefits of privacy, equity and investing.
The 2022 report details that the average income has increased by around 8% and interest rates remain stable at about 3%, keeping homeownership affordable in less populated areas despite rising home prices. However, in metropolitan centers, renting remains economical.
“Home prices are rising faster than both rents and wages while wages rise faster than rents,” ATTOM Chief Product Officer Todd Teta said. The housing market boom of the past decade keeps pushing home values to new records, yet homeownership still remains the more affordable option for average workers in a majority of the country.
The trend is slowly shifting toward renters, which could be a major force in easing price increases in 2022… For now, though, rising wages and interest rates around 3% are enough to offset recent price runups and keep ownership on the plus side of the affordability ledger compared to renting.”
Renting More Affordable in Metro Areas
Out of 1,154 counties analyzed in the 2022 Rental Affordability Report, 1,015 counties reported higher median prices for three-bedroom homes than three-bedroom rental opportunities.
Populous counties with rising home prices include Cook County (Illinois), Harris County (Texas), San Diego County (California), Maricopa County (Arizona) and Los Angeles County (California).
The largest counties that saw rental prices rising faster than home prices included Allegheny County (Pennsylvania), Lake County (Illinois), Jackson County (Missouri), Ventura County (California) and Hidalgo County (Texas).
Rural Areas See Rise in Homeownership
In counties with 500,000 to 1 million residents, renting is an economically-sound solution. However, in counties with fewer than 500,000 residents, homeownership remains affordable. This is especially true in markets with fewer than 100,000 residents.
Out of the 91 counties included in the report with a population between 500,000 and 999,999 residents, 57 counties report renting as the affordable option. The largest counties included in this group are St. Louis County (Missouri), Fresno County (California), Westchester County (New York), Collin County (Texas) and Honolulu County (Hawaii).
In the remaining 1,021 counties analyzed with fewer than 500,000 residents, homeownership is more affordable in 625 counties. The largest counties included in this group are Seminole County (Florida), Knox County (Tennessee), East Baton Rouge Parish (Louisiana), Jefferson Parish (Louisiana) and Lake County (Indiana).
With populations under 500,000 people, Sonoma County (California), Polk County (Iowa), Morris County (New Jersey), Richmond County (New York) and Clark County (Washington) all highlight more affordable rental opportunities in place of homeownership.
More Affordable Rental and Homeownership Markets in South and Midwest
In southern and midwestern markets, renting or owning a median-priced three-bedroom property requires less than one-third of the average local wage in 52 to 55% of the counties analyzed.
Among the 50 most affordable markets for renting, 43 are located in the South and Midwest. These counties include Steuben County (New York), Roane County (Tennessee), Gibson County (Indiana), Benton County (Arkansas) and Sullivan County (Tennessee).
Included on the list of counties with a population exceeding 1 million residents that feature affordable rental opportunities, Fulton County, Atlanta reports that 24.7% of the average income is necessary to rent.
The most affordable housing markets for homebuyers consist of Edgecombe County (North Carolina), Philadelphia County (Pennsylvania), Schuylkill County (Pennsylvania), Vermillion County (Illinois), Venango County (Pennsylvania) and Wapello County (Iowa).
The 2022 Rental Affordability Report also noted that in 1,154 counties analyzed, 1,013 are experiencing home prices increasing faster than average weekly wages. In 637 counties, wages are rising faster than average fair-market rents.
The information included in the ATTOM Rental Affordability Report features 50th percentile average rental data for three-bedroom opportunities in 2022, courtesy of the U.S. Department of Housing and Urban Development and second-quarter 2021 average weekly wage data from the Bureau of Labor Statistics. Publicly recorded sales deed data in 1,154 counties nationwide detailing January-November (YTD) 2021 single-family residences price data, courtesy of ATTOM, is also included.
To read the 2022 Rental Affordability Report, visit www.ATTOMData.com.
For more information about the housing market, Atlanta’s new home opportunities and upcoming events, follow along on www.AtlantaRealEstateForum.com.