Buying a home more affordable than renting in over half of US housing markets

by Chase Conner

ATTOM Data Solutions released its 2018 Rental Affordability Report, which showed that buying a median-priced home is more affordable than renting a three-bedroom property in 240 of 447 U.S. counties analyzed.

The analysis included 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 and public record sales deed data from ATTOM Data Solutions in 447 U.S. counties with sufficient home sales data.

The analysis is based on rental affordability, which is the average fair market rent for a three-bedroom property as a percentage of the average monthly wage — based on average weekly wages. Homebuying affordability is the monthly house payment for a median-priced home — based on a 3 percent down payment and including mortgage, property tax, homeowner’s insurance and private mortgage insurance — as a percentage of the average monthly wage.

Counter to the overall trend, renting is more affordable than buying a home in 79 percent of the nation’s 14 most populated counties and in 30 of 39 counties with a population of 1 million or more. The report shows that renting a three-bedroom property requires an average of 38.8 percent of income across the 447 counties analyzed.

“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.

The analysis also showed all four of the major counties in Atlanta and their percentage of wages spent on rent or buying a home based on their average weekly wages. The results showed that Dekalb County was the only county in Atlanta to have a more affordable market to buy a home than rent.

In Dekalb County, people are spending 32.1 percent of their average wages on rent. The analysis showed that there’s an average price of $1,432 for a three-bedroom rental property and the median home price was $183,500 in 2017, requiring 27.9 percent of a person’s average wage to buy a home.

All other counties showed the same average amount in price for a three-bedroom rental property but showed higher percentages of average weekly wages spent on buying a home compared to renting. Fulton County displayed that people are spending 24.9 percent of their average wages on rent versus 26.3 percent on home payments, in Cobb County 30.9 percent versus 33.1 percent and Gwinnett County 34.1 percent versus 35 percent.

“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,” Blomquist said.