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Rent Rises Faster Than Home Prices; Still More Affordable Option

ATTOM Data released it’s 2023 Rental Affordability Report, which as a whole, still finds renting the best option in the vast majority of markets compared to owning a comparably sized median-priced home. 

However, this news comes with a few caveats. The main one being that both renting and owning a three-bedroom home are significant financial burdens for at least one-third of average wage earners in the majority of the 222 counties analyzed for this report. However, average rents still require a significantly smaller portion of wages than major home-ownership expenses on a comparable three-bedroom home. 

This news comes even as rents have risen faster than home prices over the last year in about half of the country. 

“What a difference a year makes,” said Rick Sharga, EVP of Market Intelligence for ATTOM. “Last year our study concluded that it was more affordable to own than to rent in 60% of the markets analyzed. But with mortgage rates doubling, monthly payments for new homeowners rose by 45-50% compared to a year ago, even though home price appreciation has slowed down dramatically. This has made renter more affordable in the majority of markets, despite rental rates continuing to rise over the past year.” 

According to the report, average three-bedroom rents climbed more than median sales prices of single-family homes in 46% of the markets analyzed during a time of rising mortgage rates, high inflation, stock market downturns, and other factors that sidelined buyers on the grounds of affordability. 

Still, rents didn’t go up fast enough to keep them from being the more financially viable option for workers earning average local wages in most markets. Average rents commonly consume a smaller portion of average wages than major home ownership by anywhere from 5-to-30 percentage points. 

Specifically, rents for three-bedroom homes are increasing more than median prices for single-family homes in 103 of the 222 counties, or 46%. 

The report also shows that renting the typical three-bedroom property requires more than one-third of average local wages in 174 of the 222 counties analyzed for the report (78%). Further, the report shows that major expenses on a median-priced single-family home requires more than one-third of average local wages (assuming a 20% down payment) in 206 of the 222 counties analyzed for the report (93%). 

Average fair-market rents are increasing more than average local wages in 156 of the 222 counties analyzed in the report (70%). 

Median single-family home prices are rising faster than average weekly wages in 207 of the 222 counties analyzed in the report (93%) 

Click here to see the report in its entirety, including breakdowns for top metropolitan areas.

About Author: Kyle G. Horst

Kyle G. Horst is a reporter for DS News and MReport. A graduate of the University of Texas at Tyler, he has worked for a number of daily, weekly, and monthly publications in South Dakota and Texas. With more than 10 years of experience in community journalism, he has won a number of state, national, and international awards for his writing and photography including best newspaper design by the Associated Press Managing Editors Group and the international iPhone photographer of the year by the iPhone Photography Awards. He most recently worked as editor of Community Impact Newspaper covering a number of Dallas-Ft. Worth communities on a hyperlocal level. Contact Kyle G. at [email protected].

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