Renting More Affordable Than Homeownership

The average rent for a three-bedroom apartment is more affordable than owning a comparably sized median-priced home in 95% of U.S. counties analyzed for real estate data curator ATTOM’s 2023 Rent Affordability Report.

Renting and owning a three-bedroom home are significant financial burdens, consuming more than one-third of average wages in most major housing markets. But average rents require a much smaller portion of wages than home-ownership expenses on three-bedroom properties.

“What a difference a year makes,” said Rick Sharga, executive vice president 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 % to 50% compared to a year ago, even though home price appreciation has slowed down dramatically. This has made renting more affordable in the majority of markets, despite rental rates continuing to rise over the past year.”

The report shows renting is more affordable in most of the country. Although average rent for a three-bedroom residence rose more than median sales prices on single-family homes in 46% of the markets analyzed, they didn’t increase fast enough to keep them from being the more financially viable option for workers earning average local wages in most markets.

Average rents normally account for a smaller portion of wages than home ownership by anywhere from 5 to 30 percentage points.

In counties with populations of at least 1 million, renting the average three-bedroom home is more affordable than owning a single-family home. The counties with the biggest gaps between rent and homeownership expenses in terms of the amount of wages consumed include:

• Honolulu, where rent consumes 66% of wages and homeownership eats up 140%
• Alameda County, California, 47% for renting versus 110% for owning
• Santa Clara County, California, 28% versus 83%
• Orange County, California, 73% versus 125%
• Contra Costa County, California, 49% versus 90%

The South and the Midwest have the most affordable rental and homeownership markets in the nation. The least affordable markets are in the West and Northeast.

Rents are rising faster than median sales in Cook County, Illinois; San Diego, California; Orange County, California; Kings County, New York; and Miami-Dade County, Florida. Single-family home prices are rising faster than rents in Los Angeles County, California; Harris County, Texas; Maricopa County, Arizona; Dallas County, Texas; and Clark County, Nevada.

Rents and home prices are rising faster than wages in most of the country.

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