IRVINE, CA—Buying a home is more affordable than renting one in 66% of US housing markets, according to an ATTOM Data Solutions report issued Thursday. However, the reverse is true in some of the nation's most populous counties.
ATTOM's report looked at the cost of monthly house payments on a median-priced single-family home compared to the fair market rent on a three-bedroom property in 540 counties that saw at least 900 home sales last year. Across the 540 counties, monthly fair market rent on a three-bedroom property this year will require 38.6% of wages, while a monthly house payment on a median-priced home—including mortgage, property taxes and insurance—takes up an average of 36.6% of wages.
“While buying continues to be more affordable than renting in the majority of US markets, that equation could change quickly if mortgage rates keep rising in 2017,” says Daren Blomquist, SVP at Attom. “In that scenario, renters who have not yet made the leap to homeownership will find it even more difficult to make that leap this year. Additionally, renting may end up being the lesser of two housing affordability evils in a growing number of high-priced markets.”
Separately, CoreLogic reported Wednesday that home prices nationwide, including distressed sales, increased year over year by 7.1% in November 2016 compared with November 2015 and increased month over month by 1.1% in November. CoreLogic is forecasting that Y-O-Y pricing increases will slow to 4.7%, due partly to increased mortgage rates.
“Home prices continue to march higher, with home prices in 27 states above their pre-crisis peak levels,” says Anand Nallathambi, president and CEO of CoreLogic. “Nationally, the CoreLogic Home Price Index remains 4% below its April 2006 peak, but should surpass that peak” by the end of this year.
ATTOM notes that across the 540 counties analyzed for the report, fair market rents for three-bedroom properties this year are rising 4.2% compared to '16. Meanwhile, median home prices in 2016 were up 5.7% Y-O-Y and wages were up 2.2% from a year ago as of the second quarter of last year, the most recent quarter for which data are available.
Among the most populous US counties, it's more affordable to buy than to rent in Cook County, IL (Chicago); Maricopa County (Phoenix), AZ; Miami-Dade County, FL; San Bernardino County, CA; Clark County (Las Vegas), NV; Tarrant County (Fort Worth), TX; Wayne County (Detroit), MI; Broward County, FL; Bexar County (San Antonio), TX; and Philadelphia County, PA. It's more affordable to rent than to buy in Los Angeles County, CA; Harris County (Houston), TX; San Diego County, CA; Orange County, CA; Kings County (Brooklyn), NY; Dallas County, TX; Queens County, NY; Riverside County, CA; King County (Seattle), WA; and Santa Clara County (San Jose), CA.
Median home prices are rising faster than fair market rents in 63% of the 540 counties analyzed, including Los Angeles, Cook, Harris, Maricipa and Miami-Dade. However, in 200 of the 540 counties (or 37%), fair market rents are rising faster than median home prices. Markets where this is the case include San Diego County, CA; Orange County, CA; Dallas County; Santa Clara County; and Alameda County (Oakland), CA.
IRVINE, CA—Buying a home is more affordable than renting one in 66% of US housing markets, according to an ATTOM Data Solutions report issued Thursday. However, the reverse is true in some of the nation's most populous counties.
ATTOM's report looked at the cost of monthly house payments on a median-priced single-family home compared to the fair market rent on a three-bedroom property in 540 counties that saw at least 900 home sales last year. Across the 540 counties, monthly fair market rent on a three-bedroom property this year will require 38.6% of wages, while a monthly house payment on a median-priced home—including mortgage, property taxes and insurance—takes up an average of 36.6% of wages.
“While buying continues to be more affordable than renting in the majority of US markets, that equation could change quickly if mortgage rates keep rising in 2017,” says Daren Blomquist, SVP at Attom. “In that scenario, renters who have not yet made the leap to homeownership will find it even more difficult to make that leap this year. Additionally, renting may end up being the lesser of two housing affordability evils in a growing number of high-priced markets.”
Separately, CoreLogic reported Wednesday that home prices nationwide, including distressed sales, increased year over year by 7.1% in November 2016 compared with November 2015 and increased month over month by 1.1% in November. CoreLogic is forecasting that Y-O-Y pricing increases will slow to 4.7%, due partly to increased mortgage rates.
“Home prices continue to march higher, with home prices in 27 states above their pre-crisis peak levels,” says Anand Nallathambi, president and CEO of CoreLogic. “Nationally, the CoreLogic Home Price Index remains 4% below its April 2006 peak, but should surpass that peak” by the end of this year.
ATTOM notes that across the 540 counties analyzed for the report, fair market rents for three-bedroom properties this year are rising 4.2% compared to '16. Meanwhile, median home prices in 2016 were up 5.7% Y-O-Y and wages were up 2.2% from a year ago as of the second quarter of last year, the most recent quarter for which data are available.
Among the most populous US counties, it's more affordable to buy than to rent in Cook County, IL (Chicago); Maricopa County (Phoenix), AZ; Miami-Dade County, FL; San Bernardino County, CA; Clark County (Las Vegas), NV; Tarrant County (Fort Worth), TX; Wayne County (Detroit), MI; Broward County, FL; Bexar County (San Antonio), TX; and Philadelphia County, PA. It's more affordable to rent than to buy in Los Angeles County, CA; Harris County (Houston), TX; San Diego County, CA; Orange County, CA; Kings County (Brooklyn), NY; Dallas County, TX; Queens County, NY; Riverside County, CA; King County (Seattle), WA; and Santa Clara County (San Jose), CA.
Median home prices are rising faster than fair market rents in 63% of the 540 counties analyzed, including Los Angeles, Cook, Harris, Maricipa and Miami-Dade. However, in 200 of the 540 counties (or 37%), fair market rents are rising faster than median home prices. Markets where this is the case include San Diego County, CA; Orange County, CA; Dallas County; Santa Clara County; and Alameda County (Oakland), CA.
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Paul Bubny
Paul Bubny is managing editor of Real Estate Forum and GlobeSt.com. He has been reporting on business since 1988 and on commercial real estate since 2007. He is based at ALM Real Estate Media Group's offices in New York City.
