Prospective homebuyers in America got some more bad news recently when a study by real estate data firm ATTOM showed that it’s now cheaper to rent a 3br house than it is to buy one in 90% of the real estate markets in the United States. Although the study showed that renting and buying a three-bedroom home are both challenging, the average rental rates in most of America’s markets are still lower in relation to renting than buying.
In either case, regular wage earners can expect to spend more than 30% of their income on housing expenses in most counties in the country. However, renting would take up a smaller percentage of the average American’s wages in 296 of the 338 counties ATTOM analyzed for the study. It points to a long-term trend of housing unaffordability continuing through 2024, which is something most Americans don’t want to hear.
ATTOM’s CEO Rob Barber says of the study results, “Finding an affordable home remains a daunting prospect around the country for average workers, regardless of whether they want to buy or rent. Continuously increasing home prices contribute to the escalation of rental costs, making both buying and renting properties a challenging endeavor across most of the United States, But the latest data shows that even as rents are growing faster, they remain more affordable than owning.”
Counties With The Highest Populations Have The Largest Affordability Gaps
Perhaps more distressingly for everyday Americans, ATTOM’s study shows that the largest U.S. counties in terms of population are also the ones with the largest gaps in terms of the cost difference between renting and owning a home. In nearly 75% of U.S. counties with populations over 1 million, renting consumes roughly 10% less wages than buying a home at average interest rates with a 20% down payment.
Some of the counties with the largest gaps in terms of affordability between renting vs. owning include:
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Honolulu, Hawaii: Rents consume 67% of average wage vs buying, which costs 134% of the average wage
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Orange County, California: Rents consume 88% of the average wage vs. buying, which costs 136% of the average wage
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Kings County, New York (Brooklyn, NYC): Rents consume 72% of the average wage vs. buying, which costs 136% of the average wage
What makes those numbers even more scary is the fact that property managers and lenders want the monthly cost to consume less than 30% of the applicant’s income. Rents being that high compared to income also means most renters have little chance of saving money to buy a house. It also means that an alarming number of renters are just an unexpected bill away from not being able to pay the rent at all.
The South And Midwest Are The Most Affordable
Although the numbers are grim all over the country, one trend is very clear: the American South and Midwest are significantly ahead of the Northeast and West when it comes to overall housing affordability. Some of the most affordable markets in terms of ownership cost compared to average income include:
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Wayne County, Michigan (Detroit): Ownership costs 19% of the average income
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Montgomery County, Alabama: Ownership costs 21% of the average income
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St. Louis, Missouri (county and city): Ownership costs 23% of the average income
For counties with a population over 1,000,000, the most affordable markets include:
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Allegheny County, Pennsylvania (Pittsburgh): Ownership costs 27% of the average income
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Cuyahoga County, Ohio (Cleveland): Ownership costs 27% of the average income
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Harris County, Texas (Houston): Ownership costs 35% of the average income
Continued Tough Sledding for Both Buyers and Renters
It seems like just yesterday when housing affordability was a crisis in places like Los Angeles, San Francisco and New York City. That crisis has spread to other real estate markets around the country, impacting the American dream of homeownership.
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This article It’s Now Cheaper To Rent A 3BR House Than It Is To Buy One In 90% Of The United States originally appeared on Benzinga.com
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