Buying a home is more affordable than renting in 54% of markets in the United States but 64% of the population live in locations where renting is more affordable, new research shows.
The least affordable places to rent are areas in Northern California, Washington DC, and Brooklyn while the most affordable rental markets are in Alabama, Illinois, Ohio and Tennessee.
Although buying is still more affordable than renting in the majority of housing markets, that majority is shrinking as home price appreciation continues to outpace rental growth in most areas, says the report from real estate firm ATTOM Data Solutions.
‘Renting has clearly become the lesser of two housing affordability evils in many major population centres with renting more affordable than buying in 76% of counties that have a population of one million or more,’ said Daren Blomquist, the firm’s vice president.
Counter to the overall trend, renting is more affordable than buying a home in the nation’s 14 most populated counties and in 30 of 39 counties with a population of a million or more including Los Angeles County, Cook County in Chicago, Harris County in Houston, Maricopa County in Arizona and San Diego County in California.
Other markets with a population of more than a million where it is more affordable to rent than to buy a home included counties in Miami, New York City, Seattle, Las Vegas, San Jose, San Francisco and Boston.
‘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. Even with solid income growth, the rapid rise in home prices is keeping many would-be buyers out of ownership,’ said Matthew Gardner, chief economist with Windermere Real Estate.
‘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. 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,’ he added.
Among the 39 counties analysed in the report with a population of a million or more, the nine where it is more affordable to buy a home than rent were Tarrant County in Dallas, Broward County in Miami, Bexar County in San Antonio and Wayne County in Detroit.
The analysis report also shows that renting a three bedroom property requires an average of 38.8% of weekly wages across the 447 counties covered. In this sector the least affordable markets for renting were Marin County in California which require 79.5% of average wages to rent, Honolulu County in Hawaii at 71.9% and Kings County in New York at 67.4%.
The most affordable markets for renting were Madison County in Alabama at 22.3% of average wages to rent, Tazewell County in Illinois at 23.6%, Greene County in Ohio at 24.1% and Sullivan County in Tennessee at 24.2%.
Rents rise faster than wages in 60% of markets including Los Angeles County, Cook County in Illinois, Harris County in Texas, Maricopa County in Arizona and San Diego County in California.
Median home prices rose faster than average fair market rents in 263 of the 447 counties analysed in the report, including Los Angeles County, Cook County, San Diego County, Orange County in California and Miami-Dade County in Florida.
Average fair market rents rose faster than median home prices in 41% of counties including Harris County in Houston, Maricopa County in Phoenix, Kings County in Brooklyn, Queens County in New York and Tarrant County in Dallas.
