Making Mortgage Payments More Affordable Than Fair-Market Rent in 75% of Counties Analyzed

Owning a median-priced home across much of the nation is currently more affordable than renting.
The monthly house payment on a median-priced home is more affordable than the monthly fair market rent on a three-bedroom property in 76 percent of the U.S. counties included in an analysis by Realtytrac.
There were 351 counties out of the 461 analyzed (76 percent) where house payments on a median-priced home in the first quarter of 2015 were lower than fair market rents on the three-bedroom homes.
Among these 351 counties, there were 56 counties where home prices rose at least 7 percent compared to a year ago, and wages rose at least 3 percent annually — factors that could make owning a home more attractive than renting. Wages were from the most recent weekly wage data available from the Bureau of Labor Statistics, for the third quarter of 2014.


Most Affordable Buying
Out of those 56 counties where conditions favor buying over renting, the most affordable for buying were Bay County, Michigan in the Bay City metro area (11 percent of median income to make house payments on a median priced-home), Fayette County, Pennsylvania (11 percent) and Beaver County, Pennsylvania (14 percent), both in the Pittsburgh metro area, Tazewell County, Illinois in the Peoria metro area (14 percent), and Butler County, Ohio in the Cincinnati metro area (14 percent).
“From a pure affordability standpoint, renters who have saved enough to make a 10 percent down payment are better off buying in the majority of markets across the country,” said Daren Blomquist, vice president at RealtyTrac. “But factors other than affordability are keeping many renters from becoming buyers, a reality that means real estate investors buying residential properties as rentals still have the opportunity to make strong returns in many markets.
Most Affordable Renting
All of the counties reviewed had population of at least 100,000. The rental property report also ranked the markets with the best — and worst — potential returns on residential rental properties from the perspective of an investor, along with the most affordable — and least affordable — markets for renting from a renter’s perspective.
Markets where the fair market rent on a three-bedroom property represented the smallest share of median household income were Delaware County, Ohio in the Columbus metro area (14 percent), Williamson County, Tennessee in the Nashville metro area (14 percent), Hamilton County, Indiana in the Indianapolis metro area (15 percent), Fort Bend County, Texas in the Houston metro area (16 percent), and Howard County, Maryland, in the Baltimore metro area (17 percent).
On average across all 461 counties reviewed, fair market rents as set by the U.S. Department of Housing and Urban Development represented 28 percent of the estimated median household income. Monthly house payments on a median-priced home — with a 10 percent down payment and including property taxes, home insurance and mortgage insurance — represented 24 percent of the estimated median income.

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