Buying is still cheaper than renting in many US housing markets

Buying a home in the United States is still more affordable than renting in the majority of markets, according to the latest analysis from real estate data firm RealtyTrac.

But the opposite is true in markets with the biggest increase in the millennial share of the population over the last six years, the research also shows.

In the 473 counties covered by the research, the fair market rent for a three bedroom property in 2015 needed an average of 27% of median household income, while buying a median priced home required an average of 25% of median household income based on the median sales price in November.

Buying a median priced home was more affordable than renting a three bedroom property in 68% of the counties analysed, representing 57% of the total population in those counties.

But in the 25 counties with the biggest increase in millennials between 2007 and 2013, fair market rents for a three bedroom property in 2015 required 30% of the median household income on average while buying a median priced home required 36% of median household income on average. For the analysis millennials were defined as anyone born between 1977 and 1992.

‘First time buyers and potential boomerang home buyers are stuck between a rock and a hard place in today’s housing market. Many of the markets with the jobs and amenities they want have hard-to-afford rents and even harder to afford home prices while the more affordable markets have fewer well-paying jobs and tend to be off the beaten path,’ said Daren Blomquist, vice president at RealtyTrac.

‘Those emerging markets with the combination of good jobs, good affordability and a growing population of new renters and potential first time buyers represent the best opportunities for buy and hold real estate investors to buy low and benefit from rising rents in the years to come,’ he added.

The top markets with the biggest increase in the percentage of millennials over the past seven years were counties in Washington D.C., San Francisco and Denver, all of which saw an increase of more than 50% in the share of the population that is millennials.

Other markets in the top 25 for biggest increase in millennials included counties in New York, Nashville, Portland, St. Louis, Seattle, Charlotte, Minneapolis, Indianapolis, Atlanta, Orlando, Austin, Des Moines and Midland, Texas.

The average 2015 fair market rent in these top 25 counties is $1,459, some 19% above the national average for all counties analysed, the data also shows.

On average 2015 fair rents increased 3% from a year ago in these counties, with the standouts being Denver County and Midland County, Texas, both of which saw fair market rents increase more than 2%.

Median home prices increased 8% from a year ago in these counties on average compared to an average 7% increase among all counties analysed nationwide while the average unemployment rate among these counties was 5.2% in October compared to an average of 5.5% for all counties analysed.

The top counties in terms of increasing fair market rents on three bedroom properties were in Williamsport, Pennsylvania, Elizabethtown, Kentucky, and Midland, Texas, all of which saw an increase of 24% or more in fair market rents compared to 2014. Other markets among the top 25 for increasing rents included counties in Denver, Colorado, Asheville, North Carolina, Chicago and Santa Barbara, California.

The average 2015 fair market rent in these top 25 counties is $1,327, some 8% above the national average for all counties analysed and among these counties, 2015 fair market rent on a three bedroom property required 25% of median household income on average while buying a median priced home required 27% of median household income on average.

The data also shows that median home prices increased 7% from a year ago in these counties on average, the same as the average for all counties analysed.

The top markets with the biggest decreases in fair market rents on three bedroom properties were in Sumter, South Carolina, Las Cruces, New Mexico, and Longview, Texas. All three saw fair market rents decrease at least 13% from 2014 to 2015.

Other markets in the top 25 for decreasing rents included counties in several college towns: Bloomington, Illinois, Champaign-Urbana, Illinois, College Station, Texas, Terre Haute, Indiana and Las Vegas.

The average 2015 fair market rent in these counties is $1,023, some 16% below the national average for all counties analysed and among these counties, 2015 fair market rent on a three bedroom property required 29% of median household income on average while buying a median priced home required 23% of median household income on average.

Median home prices increased 4% from a year ago in these counties on average, compared to an average increase of 7% for all counties analysed.

The top counties where fair market rents were least affordable as a percentage of median household income were in New York, Baltimore, Philadelphia, Miami, Virginia Beach, San Francisco, Eureka, Calif., and Los Angeles. Fair market rents required at least 40% of median household income in all of the 10 least affordable counties.

Other markets among the top 25 for least affordable fair market rents were in Tampa, St. Louis, New Orleans, Richmond, Virginia, Atlanta, San Diego, Sacramento and Orlando.

The average 2015 fair market rent in these 25 counties is $1,686, some 38% above the national average for all counties analysed and among these counties, 2015 fair market rent on a three bedroom property required 42% of median household income on average while buying a median priced home required 44% of household income on average.

Median home prices increased 3% from a year ago in these counties on average, compared to an average 7% increase for all counties analysed.

The top counties where fair market rents were most affordable as a percentage of median household income were in Columbus, Ohio, Indianapolis and Nashville. Fair market rents required less than 15% of median household income in parts of these markets.

Other markets among the top 25 for most affordable fair market rents included counties in Atlanta, Cincinnati, Milwaukee, and Houston and the average 2015 fair market rent in these top 25 counties is $1,019, some 17% above the national average for all counties analysed.

Among these counties, 2015 fair market rent on a three bedroom property required 26% of median household income on average while buying a median priced home required 12% of household income on average.

Median home prices increased 6% from a year ago in these counties on average, compared to an average increase of 7% for all counties analysed.

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