Attom, a leading curator of land, property, and real estate data, has recently released its 2024 Rental Affordability Report, revealing an interesting trend. It shows that renting a home is more affordable than owning one in nearly 90 percent of local markets across the United States. This report sheds light on the continuous financial burden that both renting and home ownership pose for average workers, with more than one-third of their wages being consumed in the majority of county-level housing markets.
Despite the rising rents and escalating home prices over the past year, renting a home still requires a smaller portion of average wages compared to major home-ownership expenses. In fact, renting remains the more affordable option in 88 percent of the 338 U.S. counties included in the analysis.
The findings of this report are based on 2024 rental prices, 2023 home prices, and average wage figures from reputable sources. It is evident that the continuously increasing home prices contribute to the escalation of rental costs, making both buying and renting properties a challenging endeavor across most of the United States.
Rob Barber, CEO at Attom, acknowledges the difficulties faced by average workers in finding an affordable home, whether they want to buy or rent. However, he points out that even though rents are growing faster, they still remain more affordable than owning a home.
So, what is driving this shift toward renting over buying? It can be attributed to a combination of housing market trends that offer limited straightforward options for home seekers, ultimately favoring the advantage of rentals. Over the past year, rental rates have climbed even faster than home prices in most parts of the country. This phenomenon is a result of elevated home prices becoming further out of reach for average workers, leaving them with limited options. Marginal finances prevent them from obtaining mortgages, and with a tight supply of homes for sale, renting becomes the more feasible choice.
Let's take a closer look at the affordability gaps between renting and owning across different counties. Renting a three-bedroom home is most affordable compared to owning a median-priced single-family home in the nation's largest counties. In fact, in almost three-quarters of markets with populations of at least 1 million, the portion of average local wages consumed by renting is at least 10 percentage points lower than the portion required for typical major home ownership expenses. This comparison assumes a home-purchase mortgage based on a 20 percent down payment and includes mortgage payments, property taxes, and insurance.
Among the counties with a population of at least 1 million included in the report, the widest gaps between renting and owning are found in Honolulu, HI; Kings County (Brooklyn), NY; Alameda County (Oakland), CA; Santa Clara County (San Jose), CA, and Orange County, CA (outside Los Angeles). In contrast, the only two counties where it is more affordable to buy than rent in 2024 are Riverside County, CA, and Wayne County (Detroit), MI.
The report also reveals that renting three-bedroom homes stretches budgets but remains most affordable in the South and Midwest regions. In 274 out of the 338 counties analyzed, the median three-bedroom rent requires more than one-third of the average local wage. However, among the 64 markets where median three-bedroom rents require less than one-third of average local wages, 59 are located in the Midwest and South.
Some of the most affordable counties for renting, aside from Wayne County, are Jefferson County (Birmingham), AL; Ingham County (Lansing), MI; Genesee County (Flint), MI, and Caddo Parish (Shreveport), LA.
On the other hand, the least affordable counties for renting are mainly found in the South and West regions, including Collier County (Fort Myers), FL; Santa Barbara County, CA; Monterey County, CA (outside San Francisco); Indian River County (Vero Beach), FL, and Riverside County, CA.
Similarly, the most affordable markets for owning a home are primarily in the South and Midwest. Among the counties with a population of at least 1 million, the most affordable counties for owning, aside from Wayne County, include Allegheny County (Pittsburgh), PA; Cuyahoga County (Cleveland), OH; St. Louis County, MO, and Harris County (Houston), TX.
Conversely, the least affordable markets for owning are mainly in the West and Northeast regions, such as Marin County, CA (outside San Francisco); Santa Cruz County, CA; Orange County, CA (outside Los Angeles); Kings County (Brooklyn), NY, and Honolulu County, HI.
It is worth noting that median three-bedroom rents have been increasing more or declining less compared to median prices for single-family homes in the majority of counties analyzed. Additionally, average local wages are growing faster than average rents in some counties, while in others, median home prices are rising faster than weekly wages.
In conclusion, the 2024 Rental Affordability Report by Attom highlights the growing trend of renting being more affordable than owning a home in the United States. This is due to the continuously increasing home prices and the limited options available to average workers. Renting remains the more feasible choice, even though rents have been growing faster than wages. The report emphasizes the affordability gaps between renting and owning across various counties, with the most affordable rental markets located in the South and Midwest regions.