Renting Has Become More Affordable Than Owning in Many Counties

Renting remains more affordable than homeownership in nearly three-quarters of the most populated counties in the United States, according to ATTOM Data Solutions’ 2021 Rental Affordability Report.

Renting is more affordable than buying a home in 18 of the country’s 25 most populated counties, and in 29 of 44 counties with a population of 1 million or more, including Los Angeles, Houston, San Diego, Chicago, and Orange County, Calif. It’s also more affordable to rent than buy in counties in the New York City, Seattle, Dallas, San Francisco, San Jose, Boston, and Riverside, Calif., areas. (On the flip side, it’s more affordable to buy in counties in the Phoenix, Miami, Fort Worth, and Fort Lauderdale metros.) Wages are increasing more than average fair market rents in 81 percent of the counties analyzed, including in Los Angeles County, Cook County (Chicago), Maricopa County (Phoenix), San Diego County, and Orange County. 

Meanwhile, owning a median-priced three-bedroom home is more affordable than renting in 572 of the 915 U.S. counties analyzed in the report – despite the fact that median home prices have increased more than average rent in 83 percent of those areas. What’s more, home prices in almost two-thirds of the counties surveyed have increased more than wages.  

So what gives/? Declining interest rates have helped would-be buyers in suburban and rural areas make the leap to homeownership, according to the report, while renting remains king in bigger cities.  

“Home prices are rising faster than rents and wages in a majority of the country. Yet, home ownership is still more affordable, as amazingly low mortgage rates that dropped below 3 percent are helping to keep the cost of rising home prices in check,” said Todd Teta, chief product officer with ATTOM Data Solutions. “It’s startling to see that kind of trend. But it shows how both the cost of renting has been relatively high compared to the cost of ownership and how declining interest rates are having a notable impact on the housing market and home ownership.” 

The multifamily market began showing signs of strain in the third quarter of 2020, when mounting job losses and the expiration of unemployment benefits led to a record decline in average asking and effective rents. But even before that, multifamily rents were on the decline all year in the midst of economic uncertainty wrought by the COVID-19 pandemic, and rent payments slid more year-over-year in December 2020 than in April through November of last year, according to National Multifamily Housing Council data.  But there’s room for optimism:  rents largely stabilized in the fourth quarter of 2020, and appear aligned with cyclical trends in the sector.