The cost of housing varies depending on the size of the market you live in. And, according to a recent study from Attom Data Solutions, what effect that has on your housing expenses depends on whether you rent or own.
The real estate data company’s 2020 Rental Affordability Report found that homeownership remains affordable mainly in lightly populated areas, while renting is more affordable in more populous urban and suburban markets.
Owning a median-priced three-bedroom home is more affordable than renting a three-bedroom unit in 455 of the 855 counties (53%) analyzed in the study. But of the 136 counties in the report with a population of at least 500,000, renting the same-size property is more affordable than buying in 94, or 69%.
“Homeownership is a better deal than renting for the average wage earner in a slim majority of U.S. housing markets. However, there are distinct differences between different places, depending on the size and location from core metro areas,” said Todd Teta, Attom Data Solutions’ chief product officer.
In the most populous counties, the share in which renting is the most affordable option is even more stark. In the counties with population of at least 1 million, renting is more affordable than buying in 36 of 43 cases, or 84%. Many of these counties are located within the largest, most expensive metro areas in the country, including New York, Los Angeles, Chicago, Dallas, Houston, Boston, San Francisco and Seattle, as well as similarly large, high-price growth areas like Phoenix and Las Vegas.
Some major population centers, generally clustered in the Midwest, Mid-Atlantic and South regions, buck this trend. Counties with a population of at least 1 million in which buying is more affordable than renting include those in or around Miami, Detroit, Philadelphia, Tampa, Cleveland and Pittsburgh.
In some of those areas, demand for housing is starting to make an impact on both home-price appreciation and rent-growth rates. In most of the counties analyzed — 575 of 855, or about 67% — median home prices are rising faster than average fair-market rent. Some of these counties, including Wayne County (Detroit), Michigan and Philadelphia County, Pennsylvania, also appear on the list of counties in which it’s cheaper to rent than own.
Conversely, among the 280 counties in which average rents rose faster than median home prices are Los Angeles County, California; Cook County (Chicago), Illinois; and Maricopa County (Phoenix), Arizona.
Information for the report came from recently released fair-market rent data for 2020 from the U.S. Department of Housing and Urban Development, wage data from the U.S. Bureau of Labor Statistics and public-record sales-deed figures from Attom Data Solutions.