Across the U.S., buying a home is cheaper than renting in the majority of housing markets, however most Americans live in areas where renting is still cheaper than buying, according to the 2018 Rental Affordability Report from ATTOM Data Solutions, a multi-sourced property database.
Buying a median-priced home is more affordable than renting a three-bedroom property in 240 out of the 447 U.S. counties analyzed in the report, or in 54% of counties.
The report looked at recently released fair market rent data for 2018 from the U.S. Department of Housing and Urban Development, wage data from the Bureau of Labor Statistics along with public record sales deed data from ATTOM Data Solutions in 447 U.S. counties with sufficient home sales data.
“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,” ATTOM Senior Vice President Daren Blomquist said.
“Renting has clearly become the lesser of two housing affordability evils in many major population centers, with renting more affordable than buying in 76% of counties that have a population of 1 million or more,” Blomquist said. “And when broken down by population rather than number of markets, this data shows that the majority of the U.S. population, 64%, live in markets that are more affordable to rent than to buy.”
The most recent Home Price Index from CoreLogic showed home prices increased 7% from November 2016 to November 2017.
Renting is now more affordable than buying a home in the nation’s top 14 most populated counties including Los Angeles County, California; Cook County, Chicago area, Illinois; Harris County, Houston area, Texas; Maricopa County, Phoenix area, Arizona; and San Diego County, California.
“The thing about this data that concerns me the most is that it is now more affordable to rent in the greater Seattle area than buy,” said Matthew Gardner, Windermere Real Estate chief economist. “Even with solid income growth, the rapid rise in home prices is keeping many would-be buyers out of ownership.”
“To make matters worse, rapid rental rate growth in the core King County market is forcing many renters to look farther out to find something they can afford,” Gardner said. “Seattle needs considerably more affordable housing for renters and home buyers alike. Unless something changes, the area will remain very expensive, pricing many buyers out of the market.”
Counties with populations of 1 million or more where it is more affordable to buy a home than to rent include Tarrant County (Dallas-Fort Worth), Texas; Broward County (Miami), Florida; Bexar County, (San Antonio) Texas; Wayne County (Detroit), Michigan; Philadelphia County, Pennsylvania; Hillsborough County (Tampa-St. Petersburg), Florida; Cuyahoga County (Cleveland), Ohio; Allegheny County (Pittsburgh), Pennsylvania; and Saint Louis County, Missouri.
However, rental prices are rising quickly, and could soon force many renters to consider buying a home. Average fair market rents rose faster than weekly wages in 266 out of the 447 counties in the report, or 60% of housing markets.