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.
ATTOM’s 2023 Rental Affordability Report analyzes the rental vs. the housing market to determine affordability. The report included counties if they had a population of 100,000 or more, at least 100 sales from January through November of 2022, and sufficient data.
The report found that average local wages are growing faster than average rents in 30% of counties, including Maricopa County, Arizona; Dallas County, Texas; Clark County; Tarrant County, Texas, and Hillsborough County, Florida. In terms of homeownership, average weekly wages are rising faster than median home prices in only 7% of counties, including Cook County; Cuyahoga County; Westchester County, New York; Washington, D.C., and Jefferson County.
On the other hand, average fair-market rents are increasing more than average local wages in 70% of counties, including Los Angeles County, California; Cook County; Harris County; San Diego County, and Orange County. For homes, however, median single-family home prices are rising faster than average weekly wages in 93% of counties, including Los Angeles County; Harris County; Maricopa County; San Diego County and Orange County.
Key highlights:
- Among the 46 counties, the biggest gaps in renting vs. owning are in Honolulu, Hawaii (66% vs. 140%); Alameda County, California (47%vs. 110%); Santa Clara County, California (28 percent versus 83 percent); Orange County, California (73% vs. 125%) and Contra Costa County, California (49% vs. 90%).
- The biggest gaps among counties in the report with populations of less than 1 million are in San Mateo County, California (39% for renting vs. 103% for owning); Alexandria County, Virginia (46% vs. 101%); Loudoun County, Virginia (44% vs. 97%); San Francisco County (41% vs. 92%) and Utah County, Utah (37% vs. 84%).
- The report shows that renting the typical three-bedroom property requires more than one-third of average local wages in 174 of the 222 counties analyzed for the report (78%). Among the 48 markets where average three-bedroom rents require less than one-third of average local wages, 44 are in the Midwest and South.
- The most affordable counties for renting a 3-bedroom property are Jefferson County, Alabama (20% of wages needed to rent); Pulaski County, AR (23%); Cuyahoga County, Ohio (23%); Wayne County, Michigan (24 percent) and Summit County, Ohio (25 percent).
- The least affordable counties for renting are spread through the South, Northeast and West, including Kings County (126% of wages needed to rent); Indian River County, Florida (100%); Charlotte County, Florida (84%); Monterey County, California (82%) and Riverside County, California (77%).
- The report shows that major expenses on a median-priced single-family home requires more than one-third of average local wages (assuming a 20 percent down payment) in 206 of the 222 counties analyzed for the report (93%).
- The most affordable markets for owning are Wayne County (24.1% of wages needed to own); Montgomery County, Alabama (27.6%); Cuyahoga County (27.7%); Richmond County, Georgia (28.7%) and Allegheny County, Pennsylvania (29.2%).
- The least affordable markets for owning among those analyzed are Honolulu County, HI (139.8% of needed to own); Kings County (125.9%); Orange County (124.7%); Monterey County (117.3%) and Alameda County, California (110.1%).
Major takeaway:
ATTOM found that average rents for three-bedroom homes are increasing more than median prices for single-family homes in 103 of the 222 counties (46%). The most populous counties where three-bedroom rents are rising faster than median sales prices for single-family homes are Cook County, Illinois; San Diego County, California; Orange County, California; Kings County, New York, and Miami-Dade County, Florida. The largest 119 counties where sales for single-family homes are rising faster than rents are Los Angeles County, California; Harris County, Texas; Maricopa County, Arizona; Dallas County, Texas, and Clark County, Nevada.
“What a difference a year makes,” said Rick Sharga, executive vice president of market intelligence for ATTOM. “Last year our study concluded that it was more affordable to own than to rent in 60 percent of the markets analyzed. But with mortgage rates doubling, monthly payments for new homeowners rose by 45-50 percent compared to a year ago, even though home price appreciation has slowed down dramatically. This has made renter more affordable in the majority of markets, despite rental rates continuing to rise over the past year.”
For the full report, click here.
