Purchasing a three-bedroom, median-priced home is more affordable than renting a three-bedroom property in 455 of 855 (53 percent) of U.S. counties with sufficient sales data, according to a report released by Attom Data Solutions released on Thursday.

Attom calculated affordability based on the percentage of a renter or owner’s wages that went toward housing costs, with less than 30 percent being considered affordable. However, home affordability also included property tax, homeowner’s insurance and private mortgage insurance costs.

Among counties with populations of 1 million or more, owning is more affordable than renting in Miami-Dade County, Florida; Broward County, Florida; Wayne County (Detroit), Michigan; Philadelphia County, Pennsylvania; Hillsborough County (Tampa), Florida; Cuyahoga County (Cleveland), Ohio; and Allegheny County (Pittsburgh), Pennsylvania.

Meanwhile, renting is the better option in Los Angeles County, California; Cook County (Chicago), Illinois; Harris County (Houston), Texas; Maricopa County (Phoenix), Arizona; and San Diego County, California.

Although owning is the better option, Attom Data Solutions Chief Product Officer Todd Teta noted it’s only by a small margin (53 percent) and that average wage earners often struggle to afford housing as rent and home price growth continues to outpace wage growth.

Todd Teta

“Home ownership is a better deal than renting for the average wage earner in a slim majority of U.S. housing markets,” Attom Data Solutions Chief Product Officer Todd Teta said in a press release. “However, there are distinct differences between different places, depending on the size and location from core metro areas.”

The average American renter spends 37.6 percent of their monthly income on housing costs, 7.6 percent above the widely-accepted affordability threshold of 30 percent. Although everyone is feeling the crunch of high housing costs, renters across California, Colorado and Hawaii are being hit hard.

Renters in Santa Cruz County, California, are spending a whopping 82.1 percent of their wages on rent. Meanwhile, renters in Marin County, California (75.3 percent); Park County, Colorado (74.3 percent); Honolulu County, Hawaii (74.2 percent); and Kauai County, Hawaii (73.7 percent) are spending upwards of 75 percent of their income on rent. 

On the other hand, renting is still the more affordable option in secondary markets across the the Midwest and South. Renters in Roane County, Tennessee, are spending only 20.1 percent of their income on rent each month.

Steuben County, New York (22.2 percent); Madison County, Alabama (22.4 percent); Greene County, Ohio (23.0 percent); and Sangamon County, Illinois (23.2 percent) rounded out the most affordable rental markets list with renters spending no more than 24 percent of their income on rent.

Looking ahead, it seems that renting could become the more affordable option for a majority of Americans as home prices are growing faster than wages in 66.3 percent of U.S. counties. However, Teta said rock-bottom interest rates could help even the playing field for renters who are determined to become homeowners.

“For sure, either buying or renting is a financial stretch or out of reach for individual wage earners throughout most of the country in the current climate,” Teta concluded. “But with interest rates falling, owning a home can still be the more affordable option, even as prices keep rising.”

Are you ready for what the industry holds in 2020? Inman Connect New York is your key to unlocking opportunity in a changing market. At Connect you will gain insight into the future, discover new strategies and network with real estate’s best and brightest to accelerate your business. Create your 2020 success story at Inman Connect New York, January 28-31, 2019.

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Email Marian McPherson

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