Buying is still more affordable than renting in the majority of U.S. housing markets, according to a new analysis. A study conducted by RealtyTrac factored in 2015 fair market rental data recently released by the U.S. Department for Housing and Urban Development for three-bedroom properties in 543 counties nationwide with populations of at least 100,000. Buying a median-priced home was found to be more affordable than renting a three-bedroom property in 68 percent of the counties tracked.
Overall, in 473 of the counties tracked, the fair market rent for a three-bedroom property in 2015 will require 27 percent of median household income, on average. For comparison, buying a median-priced home will require an average of 25 percent of median household income, based on median sales prices in November, the study found.
The study showed that in 25 of the counties with the biggest increases in the millennial population (for this study, those born between 1977 and 1992) – housing costs were among some of the highest. Between 2007 and 2013, fair market rents for a three-bedroom property in popular millennial markets will require 30 percent of the median household income, on average. Buying a median-priced home on the other hand, will only require 36 percent of median household income, on average.
“First-time buyers and potential boomerang home buyers are stuck between a rock and a hard place in today’s housing market: Many of the markets with the jobs and amenities they want have hard-to-afford rents and even harder-to-afford home prices; while the more affordable markets have fewer well-paying jobs and tend to be off the beaten path,” says Daren Blomquist, vice president at RealtyTrac. “Those emerging markets with the combination of good jobs, good affordability, and a growing population of new renters and potential first-time home buyers represent the best opportunities for buy-and-hold real estate investors to buy low and benefit from rising rents in the years to come.”
Source: RealtyTrac and “Renting Less Affordable Than Buying – Except for Where Millennials Are Moving,” RISMedia (Dec. 28, 2014)