The “rent vs. buy” argument has been going on for years. “Why drop a load of cash on something you may move out of in a few years?” renters say. “Why put yourself at the mercy of a landlord who can raise your rent every month when you can have your very own place to personalize?” buyers say. While we’ve listed the various pros and cons of renting versus buying and told each person that the choice is up to them, ATTOM Data Solutions has offered important information that might sway the argument toward buying as the more affordable option.
According to ATTOM Data Solutions’ 2018 Rental Affordability Report, buying a median-priced home is more affordable than renting a three-bedroom property in 54 percent of United States markets. To put this in perspective, the 54 percent represents 240 of the nation’s 447 counties that were analyzed for the report.
To obtain these results, ATTOM Data Solutions compared fair market rent data for 2018 from the U.S. Department of Housing and Urban Development, wage data from the Bureau of Labor Statistics and public record sales deed data from ATTOM Data Solutions in 447 U.S. counties.
This report shows that buying is more affordable than renting, but the experts at ATTOM Data Solutions say that trend is changing. “Although buying is still more affordable than renting in the majority of U.S. housing markets, that majority is shrinking as home price appreciation continues to outpace rental growth in most areas,” said Daren Blomquist, vice president at ATTOM Data Solutions. “Renting has clearly become the lesser of two housing affordability evils in many major population centers, with renting more affordable than buying in 76 percent of counties that have a population of 1 million or more. And when broken down by population rather than number of markets, this data shows that the majority of the U.S. population — 64 percent — live in markets that are more affordable to rent than to buy.”
Indeed, the study also found that renting is more affordable than buying in the most populated counties in the study. Those counties include Los Angeles County in California, Cook County in Chicago, Harris County in Texas, Maricopa County in Phoenix and San Diego County in California. The least affordable counties for renters are Marin County in California, Spotsylvania County in Washington, D.C., Honolulu County in Hawaii, Sonoma County in Santa Rosa and Kings County in New York. The most affordable counties for renters are Madison County in Huntsville and much of Alabama, much of Ohio, much of Illinois and much of Tennessee.
Just as there are many areas where renting is more preferable than buying, there are areas where the rent is too high to consider anything but buying. Rent prices are rising faster than wages in 60 percent of markets, including Los Angeles County, Cook County, Harris County, Maricopa County and San Diego County, the same mentioned above. However, in these same counties, median home prices are rising faster than average fair market rents.
See which counties’ wages are rising faster than rents and median home prices, methodology and more information in the report. Check back with Atlanta Real Estate Forum daily for news on the real estate market.