Renters rejoice.
Anyone who’s ever had to find housing has probably had a nervous breakdown or two when hunting down affordable, centrally located, hopefully-not-dilapidated property. And if you’re not already tearing your hair out at the monumental task of finding a space within your price range, you’re likely stressing over how your chosen region can affect your salary, the quality of your retirement, your access to sustainable resources, and the way you might age. Plus, if you’re looking to purchase a home, the wild world of mortgage rates is enough to raise even the calmest buyer’s blood pressure.
In other words, we can all agree that any anguish you feel during a housing search is ridiculously valid. And now, to further complicate already incredibly convoluted matters, research is emerging that owning a home is actually now more expensive than renting a similarly-sized home in most of the U.S.
ATTOM, a curator of real estate data nationwide, just released its 2023 Rental Affordability Report and the details are disheartening. In most of the U.S. counties they analyzed, renting is now cheaper than buying: “The average three-bedroom rent is more affordable than owning a comparably sized median-priced home in…95 percent of the 222 U.S. counties analyzed for the report.”
If you’re confused about how renting can be more affordable than investing in property, here’s the breakdown: Monthly rental payments are currently less expensive than monthly mortgage payments. While purchasing a house remains a long-term investment, most people can’t afford to think years ahead during tough economic times. Renting consumes a smaller percentage of wages per month, and for most of the workforce, that small percentage is serious business.
This wasn’t the case for homeowners last year: In 2022, the study showed that it was more affordable to own a home in 60 percent of the markets ATTOM analyzed. Since then, mortgage rates have doubled and “monthly payments for new homeowners rose by 45-50 percent compared to a year ago.”
However, it’s not as if renting is suddenly fun. ATTOM reports that rent for a three-bedroom actually rose more than home prices: “Average three-bedroom rents climbed more than median sales prices on single-family homes in 46 percent of the markets analyzed.” Still, factors like those pesky mortgage rates combined with high inflation prevented homeownership from becoming a more viable option. In other words, no one can catch a break.
It’s notable, though, that affordability gaps between renting and owning tend to be widest in the most populous counties that ATTOM studied. The counties with the highest gaps were Honolulu, HI; Alameda County (Oakland), CA; and Santa Clara County (San Jose), CA. Other flashy areas in and around tech hubs and tourist destinations conform to this trend of ruthless priciness. In fact, the only county with a population over 1 million where homeownership is more affordable is Cook County, Illinois — so Chicago-based home buyers can breathe a sigh of relief.
We should mention, though, that since prices vary by region, cheaper housing is thriving in some areas. If you’re looking to either rent or buy in the Midwest or the South, for instance, you’re in luck. The top three most affordable counties for renting a three-bedroom property are Jefferson County (Birmingham), AL; Pulaski County (Little Rock), AR; and Cuyahoga County (Cleveland), OH. Similarly, the most affordable markets for owning that mythical three-bedroom property are Wayne County (Detroit), MI; Montgomery County, AL; and Cuyahoga County (Cleveland), OH.
However, if you’re currently seeking a new space in these cheaper areas and are still struggling, you’re not alone. ATTOM also reported that housing prices are rising faster than wages in almost 90 percent of the United States. It’s so rough out here, in fact, that most of us are currently more focused on affording a six-pack of grocery store eggs.
