Where in the USA is it more profitable to buy a house, and where is it better to rent

ATTOM, curator of the nation's leading real estate database, today released its new report on home buying and rental affordability across counties. ATTOM

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The report shows that median home ownership is more affordable than the median three-bedroom rental in 58% of the 1154 US counties analyzed for the report. This means that the basic cost of owning a home is a smaller proportion of the average local wage than rent.

Ownership remains more affordable, even as median home prices have risen more than median rent and more than median wages in 88% of the counties analyzed.

The analysis included recently released 2021 market rent data from Department of Housing and U.S. Urban Development, salary details from Bureau of Labor Statistics and publicly available sales data from ATTOM in 1154 US counties with enough single-family homes.

The data shows that home ownership is more affordable in most counties. The benefits of rising wages and ultra-low mortgage rates have offset the effects of a sharp rise in US home prices.

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Prices have risen more than 10% over the past year in much of the country as excess housing demand, fueled in part by the ongoing coronavirus pandemic, chases a limited supply of homes for sale.
But average wages increased by about 8% and interest rates hovered around 3%, which helped keep property affordable.

Trends in favor of homeownership are strongest in less populated suburban and rural areas with the most affordable housing costs, while renting remains more affordable in the largest metropolitan areas.

“House prices are rising faster than rents and wages, and wages are rising faster than rents. The housing boom of the last decade continues to push home prices to new records. However, homeownership continues to be the more affordable option for middle-paid workers in most counties as it continues to take up a smaller portion of their wages,” said Todd Theta, director of products at ATTOM.

Average three-bedroom home prices are rising faster than average three-bedroom rents in 1015 of the 1154 counties analyzed in this report (88%). Counties were included if they had at least 500 sales from January to November 2021.

The most populous counties where home prices are rising faster than rents are: Los Angeles County, California; Cook County (Chicago), Illinois; Harris County (Houston), Texas; Maricopa (Phoenix) County, Arizona and San Diego County, California.

The largest counties where rents are rising faster than house prices are: Allegheny County (Pittsburgh), Pennsylvania; Hidalgo County (McAllen), Texas; Ventura County, California (outside Los Angeles); Jackson County (Kansas City), Missouri; Lake County, Indiana (outside of Chicago).

Renting is more affordable than buying in the nation's most populous counties

Renting is more affordable for middle-paid workers than buying a house in 21 of the 25 most populous counties in the country and 35 of the 42 counties in the report with a population of 1 million or more (69%). These counties include: Los Angeles County, California; Cook County (Chicago), Illinois; Maricopa County (Phoenix), Arizona; San Diego County, California; Orange County, California (outside Los Angeles).

Other counties with populations over 1 million where renting is more affordable than buying include: areas in the Dallas, Miami, New York, San Francisco, Washington, DC, and Riverside, California metropolitan areas.

Among the 42 US counties analyzed in the report with populations of 1 million or more, those where buying a home is more affordable than renting include: Harris County (Houston), Texas; Bexar County (San Antonio), Texas; Wayne County (Detroit), Michigan; Philadelphia County, Pennsylvania; Hillsboro County (Tampa), Florida.

Of the remaining 1021 counties with fewer than 500 people, ownership is more affordable in 625 cases, or 61%. The largest in this group, where ownership is more affordable, are: Lake County (Gary), Indiana; Seminole County, Florida (outside Orlando); Knox County (Knoxville), Tennessee; East Baton Rouge Parish (Baton Rouge), Los Angeles; Jefferson County, Los Angeles (outside of New Orleans).

The largest counties with less than 500 residents where rent is more affordable are: Sonoma County (Santa Rosa), California; Morris County, New Jersey (outside New York); Polk County (Des Moines), Iowa; Richmond County (Staten Island), New York; Clark County, Washington (outside of Portland, Oregon).

The most affordable rental markets are still in the South and Midwest; the least accessible are in the West.

The report shows that a typical three-bedroom property requires less than one-third of the average local wage to rent in 597 of the 1154 counties analyzed for the report (52%).

Among the 50 most affordable markets for rent, 43 are in the South and Midwest, led by Steuben County, New York, just south of Rochester (18,8% of the average local wage needed to rent); Roan County, Tennessee, just west of Knoxville (18,9%); Gibson County, Indiana, just north of Evansville (19,3%); Benton County (Rogers), Arkansas (21,2%); Sullivan County (Kingsport), Tennessee (21,4%).

The most affordable rental counties among counties with at least 1 million people are: Allegheny County (Pittsburgh), Pennsylvania (23,7% of the average local wage required for rent); Cuyahoga County (Cleveland), Ohio (23,7%); Fulton County (Atlanta), Georgia (24,7%); Oakland County, Michigan, outside of Detroit (25,8%); Franklin County (Columbus), Ohio (26,6%).

The 10 least rentable counties are in the West, led by Santa Cruz County, California (84,2% of the average local wage required for rent) and: Kauai County, Hawaii (72,1%); Honolulu County, Hawaii (69,5%); Santa Barbara County, California (68,9%); Monterey County, California, outside of San Francisco (68,3%).

Among counties with a population of at least 1 million people, the least affordable to rent are: Kings County (Brooklyn), New York (62% of the average local wage required for rent); Orange County, California, outside of Los Angeles (57%); Queens County, New York (54,5%); Bronx County, New York (53,2%); Contra Costa County, California, outside of San Francisco (50,7%).

The South and Midwest once again have the most affordable homeownership markets, with the least affordable in the West and Northeast.

The report shows that owning a three-bedroom home at an average price requires less than one-third of the average local wage (assuming a 3% down payment) in 630 of the 1154 counties analyzed for the report (55%).

The most affordable markets to own are: Schuylkill County, Pennsylvania, outside of Allentown (11,1% of the average local wage required to own); Vermillion County, Illinois, which is east of Champaign (12,2%); Venango County (Oil City), Pennsylvania (5%); Wapello County (Ottumwa), Iowa (12,6%); Edgecomb County (Rocky Mount), North Carolina (12,8%).

The most affordable to own among counties with at least 1 million people are: Wayne County (Detroit), Michigan (15,7% of the average local wage required to own); Allegheny County (Pittsburgh), Pennsylvania (20,1%); Cuyahoga County (Cleveland), Ohio (22%); Philadelphia County, Pennsylvania (25,5%), Harris County (Houston), Texas (28,9%).

The least affordable markets to own are: Summit County (Breckenridge), Colorado (151,3% of the average local wage required to own); Eagle County (Vail), Colorado (139,6%); Marin County, California, outside of San Francisco (121,9 percent); Santa Cruz County, California (112%); Summit County, Utah, outside of Salt Lake City (111,2%).

Among counties with a population of at least 1 million people, the least affordable to own are: Kings County (Brooklyn), New York (101,6% of the average local wage required to own); Orange County, California, which is outside of Los Angeles (87,7%); Alameda County (Oakland), California (78,7%); Queens County, New York (77,9%); Los Angeles County, California (74,7%).

Wage growth outpaces rent growth in most markets

Wages are rising faster than average market rent in 637 of the 1154 counties analyzed in the report (55%), including: Los Angeles County, California; Cook County (Chicago), Illinois; Maricopa County (Phoenix), Arizona; San Diego County, California; Orange County, California (outside Los Angeles).

Median market rent is growing faster than median wages in 517 of the 1154 counties in the report (45%), including: Harris County (Houston), Texas; Riverside County, California (outside Los Angeles); Clark County (Las Vegas), Nevada; San Bernardino County, California (outside of Los Angeles); Bexar County (San Antonio), Texas.

House prices are rising faster than wages in nearly 90% of counties

Median home prices are rising faster than median weekly wages in 1013 of the 1154 counties analyzed in the report (88%), including: Los Angeles, Angeles County, California; Cook County (Chicago), Illinois; Harris County (Houston), Texas; Maricopa (Phoenix) County, Arizona; San Diego County, California.

Median weekly wages are rising faster than median house prices in only 141 of the 1154 counties included in the report (12%), including: Santa Clara County (San Jose), California; Allegheny County (Pittsburgh), Pennsylvania; San Francisco County, California; Hidalgo County (McAllen), Texas; San Mateo County, California (outside of San Francisco).

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