Buying a home is now more affordable than renting in most places, but there could be changes on the way.
According to the ATTOM Data Solutions 2017 Rental Affordability Report, which analyzed data from 540 counties nationwide, buying a home is the more affordable housing option in 66 percent of the markets, up from 58 percent last year. However, the potential for rising interest rates this year could put up barriers to buying a home and keep potential homeowners renting.
Here’s what you need to know about the current real estate market and what to look for as the year goes on.
Buying beats renting most of the time
Buying is often recommended over renting in the long term because your mortgage payments build equity in your home – which you’ll eventually own – while your rent only goes toward maintenance and your landlord’s wallet. However, in today’s real estate market the monthly costs of buying are also preferable to renting.
According to the report, the total monthly cost for a median-priced home in the U.S., including insurance, taxes and the mortgage payment, is more affordable than the equivalent rental costs for a three-bedroom property in 354 of the 540 analyzed counties. Several major cities are located in those 354 counties, including Chicago, Phoenix and Las Vegas.
Even when renting is an affordable option, buying a home is often more affordable. Anderson County, TN, for example, is one of the most affordable rental markets listed in the report, requiring 25.1 percent of an average wage for housing costs each month. Yet buying in this county only requires 16.4 percent of average wages, making it much more affordable.
Where renting is more affordable
According to the report, renting is more affordable than buying in just 186 analyzed counties, including counties featuring major cities like Los Angeles and Seattle. However, in many of these areas the costs for either option are so high that renting is only slightly more cost-effective.
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