The past few years has brought a rise in prices for virtually everything, including housing. Naturally, this has led to many questioning whether it is cheaper to rent or buy a home. Recently, ATTOM Data Solutions, released its 2023 Rental Affordability Report which analyzed 222 counties across the country. Unfortunately, we are still seeing affordability challenges across the country for both renting and owning a home. We share some of these insights below.
To rent or to own?
According to this analysis, renting the average three-bedroom home is more affordable compared to owning a single-family home in the nation’s largest counties with populations of at least 1 million, according to a new report from ATTOM Data Solutions. In fact, it was cheaper to rent a 3 bed home in 210 of the 222 U.S. counties analyzed for the report (95%). Interestingly, this report found that average local wages are growing faster than average rents in 30% of counties analyzed. Meanwhile, average local wages are rising faster than median home prices in only 7% of the counties included in this analysis.
Although this analysis is certainly thought-provoking, it is important to consider your personal scenario when making the decision to rent or buy a home. For example, if you are fairly certain that you will be relocating soon perhaps due to a job relocation or other reason, renting may be the most logical and convenient solution. On the other hand, if you are planning to remain in a certain area for several years, it may make more sense to buy a home and build equity over time. The part of the country that you are living in will also play a huge role in this analysis. For example, the South Florida market continues to experience high demand and subsequent growth as one of the most highly desirable living destinations in the nation. With this said, you can feel more confident that owning a home for several years or more should result in some level of home equity being accrued.
Top 5 markets with the largest gaps in renting vs owning
- #1. Honolulu, HI: 66% vs 140%
- #2. Alameda County, CA: 47% vs 110%
- #3. Santa Clara County, CA: 28% vs 83%
- #4. Orange County, CA: 73% vs 125%
- #5. Contra Costa County, CA: 49% vs 90%
Considering that rents have risen faster than home prices over the past year in roughly half the nation, the above results are somewhat surprising. Of course, with mortgage interest rates essentially doubling over the past year, home purchase affordability has become considerably more challenging. Interestingly, this exact report conducted a year ago found that it was more affordable to own than to rent in 60 percent of the markets analyzed. Moving forward, home purchase affordability will be largely dictated by inflationary pressures. As inflation begins to ease up, we should see less pressure from rising interest rates. In turn, this could improve home affordability.
Are you looking to buy or sell real estate in South Florida? Contact Natasha at Live South Florida Realty, Inc. today! Also, be sure to download the free Florida Home Search app for your mobile device.