By ATTOM Data Solutions
Home prices may be growing faster than rents in most places across the country, but homeownership still beats renting financially, shows a new study from ATTOM Data Solutions, a real estate data firm. Owning a median-priced home is more affordable than the average rent of a three-bedroom property in 58% of 1,154 counties tracked in the report.
Researchers analyzed fair market rent data estimates for 2022, wage data, and public record sales deed data for single-family home sales in the counties tracked.
Home prices have increased by more than 10% in most of the country over the past year as high demand and low housing inventories have moved prices higher. On the other hand, average wages have increased about 8% in comparison. Interest rates have hovered around 3%, which have helped with homeownership affordability, researchers note.
“Home prices are rising faster than both rents and wages, while wages rise faster than rents,” says Todd Teta, chief product officer with ATTOM. “And the housing market boom of the past decade keeps pushing home values to new records. Yet homeownership 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. The trend is slowly shifting toward renters, which could be a major force in easing price increases in 2022. Prices can only go up by so much more before renting becomes financially easier. For now, though, rising wages and interest rates around 3 percent are enough to offset recent price run-ups and keep ownership on the plus side of the affordability ledger compared to renting.”
Owning a home tends to be the most affordable in less-populated counties. Some of the areas with populations of less than 500,000 where owning particularly outpaces renting are Lake County (Gary), Ind.; Seminole County, Fla. (outside Orlando); Knox County (Knoxville), Tenn.; East Baton Rouge Parish (Baton Rouge), La.; and Jefferson Parish, La. (outside New Orleans), the report shows.
Meanwhile, the most affordable counties for owning a home with a population of at least 1 million are in Wayne County (Detroit), Mich.; Allegheny County (Pittsburgh), Pa.; Cuyahoga County, Ohio; Philadelphia County, Pa.; and Harris County (Houston), Texas.