The housing market is still soaring, but a new report outlines a promising indicator for those looking to buy amid record-high home prices.
It’s still more affordable to own a home than to rent in a majority of the United States, according to ATTOM’s 2022 Rental Affordability Report, which analyzed the differences between a median-priced home and three-bedroom rental in 1,154 counties across the country. The analysis found home ownership to be more affordable in 58 percent of the studied counties.
The study compares expenses for both living options with local average wages, concluding that while prices for homes are skyrocketing, wages are rising and mortgage rates remain low.
Though owning may be most affordable in most of the country, the report depicts the sharp divide between the best options in urban and rural areas. Ownership is best affordable in rural and less-populous areas, while renting makes more sense for those in major metropolitan areas.
While ownership affordability holds the advantage now, Todd Teta, chief product officer with ATTOM, said the rising housing market may soon make renting the more affordable option nationwide.
“The trend is slowly shifting toward renters, which could be a major force in easing price increases in 2022,” Teta said. “Prices can only go up by so much more before renting becomes financially easier.”
However, Teta added, “home ownership still remains the more affordable option for average workers in a majority of the country because it still takes up a smaller portion of their pay.”
In 21 of the most 25 populous counties in the country, renting holds the affordability advantage. That’s also true in 35 of the 42 counties with at least 1 million residents, including Los Angeles, Chicago, San Francisco, Miami and New York City. Counties including Houston and Tampa are among those where home ownership is more affordable.
Renting is also the more affordable option in counties with at least 500,000 people, but fewer than 1 million. Collin County, Texas (outside of Dallas) and Westchester County, New York are among the 63 percent of counties in the population range to have superior renting affordability.
The tide turns towards homeownership in counties with fewer than 500,000 people. Home ownership is more affordable than renting in 61 percent of these counties, according to the report. Prominent exceptions include Morris County, New Jersey and Richmond County, New York, home of Staten Island.
Prices on three-bedroom homes increased more than prices on three-bedroom apartments in 88 percent of counties from January to November 2021, according to the report. Los Angeles County, California and Cook County, Illinois are among the markets to see faster growth in home prices.