In most U.S. housing markets, owning a home still costs less than renting, despite skyrocketing median home prices, according to a new study. In 58 percent of the 1,154 U.S. counties studied using data from the U.S. Department of Housing and Urban Development and the Bureau of Labor Statistics, owning a median-priced home was more affordable than renting a three-bedroom property on average, according to an ATTOM Data Solutions report released on Thursday, the 6th of January!
Renting, on the other hand, was determined to be the most cost-effective option in the majority of large urban locations. “Home prices are rising faster than both rents and wages, while wages are rising faster than rents. Because of this, property values have reached new highs, as Attom’s Chief Product Officer Todd Teta said in a press release.
Because it still takes up less of their wages, home ownership is still the more affordable option for most employees in a large chunk of the country.” However, growing wages and low mortgage rates have offset the effect of rising property prices in nearly 90% of the country.
Home prices rose an average of 1% across the country last year, but income growth has averaged 8%, and mortgage rates have held steady at approximately 3%.
According to the survey, home prices are rising faster than salaries in much of the country. There are counties with over a million inhabitants that have discovered that renting is more cost-effective than buying in the nation’s most populated metropolis, whereas suburban and rural areas found that buying was their most cost-effective option.
In 35 of the 42 counties with a population of one million or more people or more studied in the survey, renting is more affordable than owning, including Los Angeles, Chicago, Phoenix, San Diego, and Orange County. Houston, San Antonio, Detroit, Philadelphia, and Tampa, according to Attom, are all less expensive for homeowners.
The rental and ownership markets in the South and Midwest are still the most cost-effective, while those in the West and the Northeast are among the most expensive in terms of both renting and owning a property.
TETA forecast that renting will become the most cost-effective alternative, but income growth and low mortgage rates will keep homebuying in favor for the time being. Renters could have a big role in slowing price increases in 2022, as the pattern is gradually shifting.” There’s only a certain amount of price inflation left until renting becomes more affordable,” he asserted.
However, rising incomes and interest rates of approximately 3% are enough to offset recent price increases and keep ownership on the more affordable side compared to renting at least for the time being,” says the report.