Despite double-digit price increases for homes in 2021, a new report from a real estate analytics firm found that it’s still more affordable to buy than rent in 58 percent of U.S. housing markets.
Rising wages and low mortgage rates contribute to that affordability, with average wages rising about 8 percent while mortgage rates stayed close to 3 percent in 2021.
While they vary by market, home sales prices increased year over year nationwide by 18.1 percent in November 2021 compared with November 2020, according to CoreLogic’s Home Price Index. Similarly, rents increased by nearly 18 percent nationally from the beginning of 2021 through December, according to Apartment List, a rental housing platform, a record-breaking increase.
Attom’s analysis, based on rent data from the U.S. Department of Housing and Urban Development, wage data from the Bureau of Labor Statistics and home sales statistics from Attom’s data, found that owning a median-priced home is more affordable than the average rent on a three-bedroom property in 666 of the 1,154 counties studied for the report.
However, renting is more affordable than buying in 21 of the 25 most populated counties and in 35 of the 42 counties in the report with 1 million or more residents. In other words, renting is more affordable than buying in most urban locations.
Renting is more affordable than buying in the following areas with a population of 1 million or more: Washington, D.C. metro area, along with Los Angeles; Chicago; Phoenix; San Diego; Orange County, Calif.; Dallas; Miami; New York City; San Francisco; and Riverside, Calif.
Buying is more affordable than renting in the following areas with a population of 1 million or more: Houston, San Antonio, Detroit, Philadelphia and Tampa.
Renters appear to benefit most from rising wages. In most markets (55 percent of those analyzed by Attom), wage growth is outpacing rent growth. But median home prices are rising faster than wage growth in 88 percent of housing markets.
The 50 most affordable markets for renting, according to Attom, include 43 in the South and Midwest, while the least affordable markets for renting are in the West. Similarly, the most affordable markets for home-buying are in the South and Midwest, with the least affordable for buying in the West and Northeast.
For Attom’s full report, click here.
