Last year, it was more expensive to rent than own. High home prices and mortgage rates that doubled in 2022 flipped that, according to a new report from property data firm Attom.
People will spend a bigger percentage of their pay buying a home than renting one in 95 percent of the U.S., according to a new report from property data firm Attom.
In 210 out of 222 counties analyzed, renting an average three-bedroom home was less expensive than buying one at median prices, according to the report. Rent is rising faster than home prices in nearly half the country. Even where it’s the less expensive option, the price of rent and ownership is high regardless, the report reads.
The change is a reversal from a year before when it was generally less expensive to buy than rent.
“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.”
High interest rates sent the monthly cost of ownership up about 50 percent compared to a year before.
“This has made renting more affordable in the majority of markets, despite rental rates continuing to rise over the past year,” Sharga added.
Indeed, the cost to rent a single-family home has risen 26 percent since February 2020, according to CoreLogic.
For this report, Attom looked at single-family homes in markets with a population of at least 100,000 and prices between January and November 2022. It also looked at average market rental prices for 2023 and home sales prices for 2022 for three-bedroom properties as a percentage of the local wages, as well as home prices based on a 20 percent down payment and escrow.
Housing costs now take up more than a third of the monthly income for people in most major markets, Attom found. But rent is significantly lower thanks in large part to the run-up in mortgage rates in 2022.
“Average rents commonly consume a smaller portion of average wages than major home ownership by anywhere from 5 to 30 percentage points,” the report notes.
Rent is rising faster than home prices in the nation’s most populous counties, including Cook County, Illinois; San Diego and Orange counties, California; Kings County, New York; and Miami-Dade County, Florida.
Home prices were rising faster in places like Los Angeles, Houston, Phoenix, Las Vegas and Dallas.
Rent grew faster than local wages in 70 percent of the counties analyzed. Wages outpaced the growth in rent in Phoenix, Dallas, Las Vegas, Fort Worth and Tampa.
Median home prices are rising faster than average wages in 93 percent of the counties analyzed. Wage growth outpaces home prices in Chicago; Cleveland; Westchester, New York; Washington, D.C.; and Birmingham, Alabama.