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Market Changes Could Further Crimp Affordability

Money Steps BHA new report from ATTOM Data Solutions showed that buying is a more affordable option than renting in two-thirds of the U.S. market, but that could change along with mortgage rates this year.

ATTOM’s 2017 Rental Affordability Report, based on data from the U.S. Department of Housing and Urban Development, the Bureau of Labor Statistics, and public record sales deed data from RealtyTrac, found that buying is more affordable than the fair market rent on a three-bedroom property in 66 percent of U.S. markets.

The counties housing Chicago, Phoenix, Miami, Las Vegas, Detroit, Fort Worth, San Antonio, Philadelphia, and San Bernardino were the leading major metro markets where buying was a better option. Those housing San Francisco, Key West, Honolulu, Maui, and the Washington, D.C., metro area had the least affordable rents in the country.

Overall, ATTOM found 55 markets where the average rent on a three-bedroom property in 2017 will require more than 50 percent of average wages. Those areas also include five counties in the New York metro area, as well as San Francisco and San Diego.

ATTOM reported that fair market rents for three-bedroom properties “are rising 4.2 percent compared to 2016, while median home prices in 2016 were up 5.7 percent from a year ago and average wages were up 2.2 percent from a year ago in the second quarter of 2016.”

“While buying continues to be more affordable than renting in the majority of U.S. markets, that equation could change quickly if mortgage rates keep rising in 2017.”
Daren Blomquist, ATTOM Data Solutions

The report also stated that, counter the national trend, average wage growth is outpacing growth in fair market rents in 38 percent of markets. Meanwhile, median home prices in 2016 rose faster than average wages in almost 80 percent of the markets.

However: “While buying continues to be more affordable than renting in the majority of U.S. markets, that equation could change quickly if mortgage rates keep rising in 2017,” said Daren Blomquist, senior vice president with ATTOM Data Solutions. “In that scenario, renters who have not yet made the leap to homeownership will find it even more difficult to make that leap this year. Additionally, renting may end up being the lesser of two housing affordability evils in a growing number of high-priced markets.”

In a full third of markets, renting is already cheaper than buying. The largest metro areas where that holds true are Los Angeles, Houston, Dallas, New York, Seattle, and the Bay Area.

ATTOM reported that the most affordable rental markets, requiring the lowest percentage of average wages to pay fair market rent are the counties housing Huntsville, Pittsburgh, Atlanta, Knoxville, and Rock Island, Illinois.

Click here to view the complete report.

About Author: Scott Morgan

Scott Morgan is a multi-award-winning journalist and editor based out of Texas. During his 11 years as a newspaper journalist, he wrote more than 4,000 published pieces. He's been recognized for his work since 2001, and his creative writing continues to win acclaim from readers and fellow writers alike. He is also a creative writing teacher and the author of several books, from short fiction to written works about writing.

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