Owning more affordable than renting in two-thirds of U.S.

by Paul Gatling ([email protected]) 351 views 

A new report shows owning a home is more affordable than renting a similar property in 63% of U.S. housing markets.

The 2021 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 572, or 63%, of the 915 U.S. counties analyzed for the report. That’s up from 455, or 53%, of 855 U.S. counties analyzed for the 2020 report.

The increase occurs even as median home prices have increased more than average rents over the past year in 83% of those counties, according to Attom, and have risen more than wages in almost two-thirds of the nation.

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 16 of Arkansas’ 75 counties, and it is more affordable to buy in all of them but one — Benton County, which is one of the most affordable home rental markets in the country.

Median home price in Benton County in 2020, where weekly wages were $1,327 last year, was $210,000, up more than 10% from 2019. The company said renters needed to pay 20.7% of an average monthly household wage, or about $1,192, to rent an equivalent three-bedroom home. Only Roane County, Tenn. (outside Knoxville) required a lower percentage of wages (18.4%) needed to rent.

Washington County’s median home price was $207,900. But because of lower weekly household wages ($968), renters would need to pay 28.4% ($1,192) 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: 27.4%, or $1,206, for a $156,625 house.
  • Crawford County: 31.9%, or $1,043, for a $121,300 house.
  • Faulkner County: 32.5%, or $1,206, for a $170,100 house.
  • Craighead County: 31%, or $1,108, for a $140,800 house.
  • Saline County: 36.6%, or $1,206, for a $162,000 house.

Real estate agents typically recommend not dedicating more than one-third of household income to housing costs. The median home prices in Benton and Washington counties are the only counties higher than $200,000, according to the Attom data.

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