It’s still more affordable to buy a property than to rent one, but there’s a catch.
Buying a median-priced home is more affordable than renting a three-bedroom property in most of the country, according to the 2018 Rental Affordability Report created by ATTOM Data Solutions.
The study analyzed rent, wage, and home sale data across 447 U.S. counties. The verdict was that buying is more affordable than renting in 240 of those counties, 54%, but here’s where the catch comes in.
The research concluded it is more affordable to rent in the nation’s 14 most populated counties, and in 30 of 39 counties with a population of more than 1 million people.
In other words, 64% of the U.S. population lives in counties where it’s more affordable to rent rather than buy.
So, why is it more affordable to rent than to buy in counties with dense populations? The answer is simple. Home prices are inflating due to the lack of inventory. And prices are rising faster than income.
Just take a look at the November existing-home sales report as the most recent example of the housing shortage. Inventory decreased by more than seven percent in November, down to 1.67 million existing homes available for sale, according to the National Association of Realtors.
Inventory is nearly 10% lower than it was in 2016.
This insufficient supply of homes resulted in a significant increase in the median existing-home price. Median home prices were up nearly 6% in November and home prices are rising faster than rent prices in 59% of markets studied by ATTOM Data Solutions.