Where Home Ownership Is More Affordable Than Renting

Renters in Pittsburgh, Ventura County, Kansas City, McAllen, Texas and Lake County outside of Chicago can expect rents to rise at a pace greater than their area’s home prices, according to data released this week in the ATTOM 2022 Rental Affordability Report.

Those aren’t the only locations where the cost to rent exceeds homeownership.

ATTOM’s report shows that owning a median-priced home is more affordable than the average rent on a three-bedroom property in 666 (or 58%) of the 1,154 US counties analyzed for the report. That means major home ownership expenses consume a smaller portion of average local wages than renting.

And also consider: Home ownership remains more affordable even though median home prices have increased more than average rents and more than average wages in 88% of the counties analyzed.

Trends favoring home ownership show up most in less-populous suburban and rural areas with the most affordable home values, while renting remains more affordable in the biggest metropolitan areas.

The analysis incorporated recently released fair-market rent data for 2022 from the US Department of Housing and Urban Development, wage data from the Bureau of Labor Statistics and public-record sales-deed data from ATTOM in 1,154 US counties with sufficient single-family home sales data.

Homebuyers Chasing a Tight Supply

Home prices have shot up more than 10% in most of the country over the past year as a glut of home buyers, partly spurred by the ongoing pandemic, chase a tight supply of homes for sale. But average wages have increased about 8% while interest rates have hovered around 3%, helping to maintain ownership affordability.

Todd Teta, chief product officer with ATTOM, noted that “Home-prices are rising faster than both rents and wages while wages rise faster than rents. And the housing market boom of the past decade keeps pushing home values to new records. 

“Yet home ownership 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,” he continued in prepared remarks. 

He went on to say that the affordability pendulum 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% are enough to offset recent price run ups and keep ownership on the plus side of the affordability ledger compared to renting.”

Owning Most Affordable in Less-Populated Counties

While renting is more affordable in a majority of counties with populations between 500,000 and 1 million, home ownership is the more viable option in counties with a population of less than 500,000. That’s especially true in markets with fewer than 100,000 residents.

Renting is more affordable in 57, or 63%, of the 91 counties in the report with 500,000 to 999,999 people. The largest in this group where renting is more affordable are St. Louis County, Mo.; Honolulu County; Fresno County; Collin County, Texas (outside Dallas) and Westchester County, N.Y. (outside New York City).

Among the remaining 1,021 counties, which have a population less than 500,000, owning is more affordable in 625, or 61%. The largest in this group where owning is more affordable are Lake County (Gary, Ind.); Seminole County (outside Orlando); Knox County (Knoxville); East Baton Rouge Parish (Baton Rouge, La.), and Jefferson Parish (outside New Orleans).