Home prices are soaring so high, many Americans might wonder if financially they would be better off renting rather than buying a house.
And in many cases, the answer would be yes.
Two-thirds of United States residents live in markets where it’s better to hand that monthly payment to a landlord rather than a mortgage company. That’s the crux of a report released Thursday by Attom Data Solutions, a company that closely tracks housing markets across the fruited plain.
The report adds fodder to the passionate discussion many prospective home buyers are having these days — as reported last week by the Star-Telegram — about whether buying a home in the Dallas-Fort Worth-Arlington market is a worthwhile investment.
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The Star-Telegram also did a story earlier in 2017 about the phenomenon of quickly rising rents in a region that used to be considered a bargain for tenants.
But before we go further, a couple of important points about the Attom Data study:
- Fort Worth is safe for now. The study determined that buying a home was still more affordable than renting in Fort Worth and Arlington. Fort Worth’s Tarrant County was one of just nine counties in the U.S. with a population of 1 million or more where buying was still the best option. (San Antonio’s Bexar County was in that group, too.) However, Fort Worth’s neighbors didn’t fare as well. The report determined that renting was a better option in Collin, Dallas and Denton counties. Check out the heat map for more county-by-county details across the U.S.
- Also, although 64 percent of the U.S. population lives in areas where renting is a better option — and those tend to be the most populated metro areas — when looking at the country on a county-by-county basis (without regard to population size) in 54 percent of housing markets it’s still better to buy.
“Although buying is still more affordable than renting in the majority of U.S. housing markets, that majority is shrinking as home price appreciation continues to outpace rental growth in most areas,” said Daren Blomquist, Attom Data vice president. “Renting has clearly become the lesser of two housing affordability evils in many major population centers, with renting more affordable than buying in 76 percent of counties that have a population of 1 million or more.”
The analysis included fair market rent data for 2018 from the U.S. Department of Housing and Urban Development, wage data from the Bureau of Labor Statistics and public record sales deed data from 447 U.S. counties, Attom Data officials said.
Markets with a population of 1 million or more where renting is better include Miami, New York, Seattle, Las Vegas and San Jose/San Francisco.
Rent affordability was determined by calculating the average fair market cost of a three-bedroom property as a percentage of the average monthly wage in each county, Blomquist said. Home buying affordability was figured by comparing the monthly house payment for a median-priced home — based on a 3 percent down payment and including mortgage, property tax, homeowner’s insurance and private mortgage insurance — as a percentage of the average monthly wage.