Owning more affordable than renting in 53% of U.S.

FinanceNews Briefs

by Paul Gatling ([email protected]) January 26, 2020 5:26 pm 1,018 views 

A new report shows owning a home is more affordable than renting a similar property in just over half of the country.

The 2020 Rental Affordability Report was completed by California-based Attom Data Solutions, which tracks national housing and foreclosure data. It shows that owning a median-priced, three-bedroom home is more affordable than renting a three-bedroom property in 455, or 53%, of the 855 U.S. counties analyzed for the report.

Attom calculates the percent of average monthly wages needed to afford a mortgage on a three-bedroom home at the median sales price for a community.

Attom collected data from 11 of Arkansas’ 75 counties, and it is more affordable to buy in each of them. In Northwest Arkansas, Benton County’s median home price is $189,900. The company said renters needed to pay 23.4% of an average monthly household wage, or about $1,213, to rent an equivalent three-bedroom home. Washington County’s median home price also was $189,000. But because of lower weekly household wages ($904), renters would need to pay 31% of an average monthly household wage to rent an equivalent three-bedroom home.

Affordability for buying was calculated by dividing the annualized house payment for an average-priced three-bedroom property by the estimated median household income.

An estimated home-payment amount factored in a 3% down payment, a 30-year fixed-rate loan with the average interest rate from the Freddie Mac primary mortgage market survey, and related property and mortgage insurance costs and property taxes.

For other metro counties in Arkansas, Attom determined the percent of monthly wages needed for a rental was:

  • Pulaski County: 28%, or $1,150, for a $148,000 house.
  • Crawford County: 31.5%, or $979, for a $106,000 house.
  • Faulkner County: 33.3%, or $1,150, for a $154,900 house.
  • Craighead County: 33.7%, or $1,120, for a $137,000 house.
  • Saline County: 36.9%, or $1,150, for a $150,000 house.

Real estate agents typically recommend not dedicating more than one-third of household income to housing costs. The median home price of $189,000 in Benton and Washington counties is the highest in the state, according to the Attom data.